Friday, 19 August 2011

Irish Corporate Governance Code for captives

The Central Bank of Ireland pushed out the Corporate Governance Code for Captives this week, which is to all intents and purposes a lightly abridged version of the main event.

My particular interest was their approach to governance and risk appetite, and there is no let-up from the obligations on insurance undertakings in this regard.
  • Full qualitative and quantitative documented Risk Appetite required - argued against by some in the industry on the basis of "natuire, scale and complexity"
  • Material deviation from Risk Appetite to be reported CBoI within 5 days - regardless of whether parent company or captive manager identifies it
  • "Where appropriate", the board may consider a risk committee
  • Internal Audit function required, but may use Group resource, or indeed outsource
Handy FAQ document accompanied its release - unlike in the consultation for the main code (in which almost every suggestion was ignored save for tiering supervision between 'big' and 'little'), they have actually made a few tweaks in response to the industry, which is very healthy. They have increased the transitional period by an extra 3 months, dropped the requirement for a deputy chairman, and permitted non-directors to aid in the development of captive strategy.

I am by no means an expert in the area, but they seem like proportional, tailored solutions to retaining a presence in this market, and the Central Bank ought to be applauded for the effort, even if judging by the number of "no's" in the consultation, the industry wanted more!

1 comment:

  1. Group Captive is formed by Co-ops and especially Farm and Grower Co-ops are a bit different. In those cases, members customarily rely on each other to a large degree. They share the same suppliers, the same weather, the same risks and often the same way of life. It makes good sense for such enterprises to explore the possibilities that Captive Insurance presents to them.

    Group Captive