Facebook logo
Facebook logo
Facebook logo
Facebook logo

Latest Headlines

Captive Insurance Times home | Interviews | Ciaran Healy of Willis Towers Watson ← You are here

[close]
Latest News
Atlas secures captive manager approval in Texas
28 March 2017 | Charlotte
Atlas Insurance Management has received approval from the Texas Department of Insurance to act as a manager for captive insurance businesses in the state Read more

TRA Stanford to acquire PHT Services
29 March 2017 | Columbia
The Risk Authority Stanford (TRA) is expected to acquire PHT Services (PHTS), following unanimous approval by both boards of directors, according to a statement from PHTS Read more

For more news visit our news section

Upcoming events
PARIMA MANILA 2017
Date: 28 March 2017
Location: SHANGRI LA at THE FORT Taguig, Metro Manila
Find out more

Captives & Corporate Insurance Strategies Summit
Date: 05 - 06 June 2017
Location: Canada
Find out more

For more events visit our event section
Industry recruitment
There are currently no jobs available
For more jobs visit our recruitment section
Captive Insurance Times
View the latest issues online now

Sister publications
Securities Lending Times
http://captiveinsurancetimes.com

Asset Servicing Times
www.assetservicingtimes.com

Real Estate Investment Times
www.realestateinvestmenttimes.com

Media pack [download]
Ad specs [download]
Latest features
Coming up captives
Feature: Disruption was the theme of the recent CICA International Conference in San Diego, where a new president was welcomed, the next generation of professionals was groomed and a regulatory shake up was previewed Read more

Cook Islands
Country profile: In an era of increasing uncertainty, Tamatoa Jonassen suggests that the Cook Islands can be a bridge to financial security in a captive Read more

Eduardo Fox :: Appleby
Interview: Appleby and Bermuda are optimistic about the future of Latin American captives. Eduardo Fox explains Read more

For more features visit our features section
Interview
Latest news
Ciaran Healy
Willis Towers Watson
Although it’s typically viewed as a defensive move, BEPS could mean positive things for captives, says Ciaran Healy of Willis Towers Watson

The OECD’s BEPS has been an ongoing issue for the captive insurance, how are the major domiciles dealing with this? And where are those domiciles in terms of implementation of the framework?

Although the Organisation for Economic Co-operation and Development (OECD) and G20’s action plan was released back in October 2015, with consultations on the initiative taking place for a number of years prior to this, the majority of jurisdictions have yet to enact the action plan guidelines fully. As a result of this, the majority of domiciles are adopting a ‘wait and watch’ position. This is somewhat understandable given the fact that each jurisdiction has the authority to interpret and apply base erosion and profit sharing (BEPS)-related measures as they deem fit.

It is important to note that it is not only the approach of the jurisdiction where the captive is based that needs to be considered, but more so the jurisdiction where the captive owner is based and potentially the locations of insured parties.

What we are seeing more of in the major domiciles is a rising awareness, and the identification of the need for education on the subject. Captive associations in many domiciles are organising briefing sessions and facilitating Q&As with service providers to socialise the challenge locally. BEPS is now almost a compulsory topic at the usual domicile captive conferences, which is evidence of how important the topic is regarded by the industry.

One of the interesting aspects about BEPS is that, although it will likely affect each domicile, the perception around the extent and nature of the impact differs per domicile, with some locations adopting the stance that BEPS is an opportunity as opposed to a threat.

In the first six months of 2017, what do captives and their managers need to look out for in terms of BEPS?

Positive preparation is key. Although the ultimate guise of BEPS in all jurisdictions is still to emerge, there is enough in the principles covered in the OECD Action Plan for captives to be preparing for.

A sensible approach for the first six months of 2017, and something we are speaking to clients about, will be to review the captives’ positions in relation to the principle expectations of the BEPS package. Measuring the captive against key metrics and documenting where positive compliance can be demonstrated, and where remedial action is required, will allow the captive owner to begin thinking about BEPS in specific terms that are actionable.

This can lead to an action plan, which ultimately puts the captive in control of the BEPS challenge and removes much of the uncertainty that currently exists for many captive owners.

The concept of positive compliance is an important one—preparing for the challenge of BEPS is as much about identification and documentation of all the things the captive does well as it is about identifying potential areas that may not be fully aligned to BEPS expectations.

There is no prescribed checklist to mark your captive against to achieve definitive assurance, the BEPS span is more fluid and wide ranging. With this in mind, we would suggest that a self-evaluation or BEPS ‘health-check’ would be positive first preparatory steps to keep captive owners on the forefront.

Willis Towers Watson recently launched a new BEPS captive product. How will this help clients with implementation?

The purpose of Radar is to provide captive owners with a clear blueprint to BEPS compliance, captive value and future strategy in a format that is reviewable and that supports high-level governance and oversight. Our approach is straightforward—review, analyse, document, action, respond—which was the inspiration for the name.

Captive owners will require a response framework that reflects the multidimensional nature of the BEPS challenge. Our Radar tool blends quantitative and qualitative measurement metrics across three core areas—transfer pricing, economic rationale and substance.

One of the things we were conscious of in developing our offering was the potential mismatch between those less familiar with captive concepts and the captive industry, and the difficulties that this mismatch may cause.

Being able to effectively demonstrate and assign a value to the nuanced and indirect ways that a captive promotes better group risk management, for example, are benefits that need to be considered in the overall BEPS evaluation and something the Radar framework accommodates.

However, to be completely effective, this perspective needs to be bi-directional. Radar also tests key financial metrics in a manner similar to that of a tax investigator, which provides the captive owner insight into where a potential misconception or genuine compliance risk may exist. A key benefit of this approach is that it provides quantitative measures to aim towards, as opposed to unmeasurable qualitative remedial recommendations.

Overall, Radar underlines our approach to BEPS, which is primarily about positive compliance and building on the positive, bone fide risk management benefits that captives provide.

What kind of data flows through a captive in this day and age, and how will analysis and interpretation help captives to navigate regulatory hurdles such as BEPS?

Clearly, financial data is critical, predominantly around losses. Analysis of this data has always been a key plank of any successful captive strategy, whether in respect of risk management, risk financing and transfer pricing, and so on. But a captive can provide indicators of other forms of value too—not necessarily financial but strategic and operational.

Capturing these through captive oversight and analysis, evaluating the benefits from a parent perspective, and ensuring ongoing alignment with a changing market environment and the demands of the business will all help to support compliance with BEPS.

Although generally viewed by the industry as a defensive initiative, BEPS will prompt more captive owners to critically assess the value, in all its many forms, that the captive creates, and data will be critical to this.

Assessment and measurement of value created by the captive will likely lead to improvement actions, which in the long term will be good for the individual captive. If you can’t measure it, you can’t improve it, and data is the key to measurement. This applies to improvement in the context of BEPS, but also more generally to the entire captive strategy.

To view the full issue in which this article appeared - Click Here



Atlas secures captive manager approval in Texas
Atlas Insurance Management has received approval from the Texas Department of Insurance to act as a Read more

TRA Stanford to acquire PHT Services
The Risk Authority Stanford (TRA) is expected to acquire PHT Services (PHTS), following unanimous ap Read more

UK finally triggers Brexit
The UK has officially pulled the trigger on Article 50 and commenced the two-year negotiation proces Read more

XL Catlin bolsters structured risk solutions team
XL Catlin has named Isa Ennadifi as senior underwriter of structured risk solutions, based in London Read more

Bespoke Software launches inTell Captive
Bermuda-based Bespoke Software has launched the new business intelligence software solution to help Read more

Captive Insurance Times site map
Home
Home

Sitemap

Issue archive
Back issues online
Recruitment
Recruitment
Events andtraining
Upcoming events

Upcoming training

Company info
About us

Contact us


Copyright (C) 2013 Black Knight Media Ltd. All rights reserved. No reproduction without prior authorization