Captives
Last Updated :
27 June 2011
Extensive infrastructure investments coupled with growing populations and incomes underpin a dramatic increase in insurable assets in the GCC region. The captive insurance market in Qatar is expected to grow rapidly during the next few years spurred by over US$140bn of anticipated spending on infrastructure through to 2015 with captive insurance increasingly becoming an alternative risk transfer mechanism for large projects. Another factor driving the market is improvement in corporate risk management standards, which favour increased risk retention through captive solutions, the introduction of company insurance covers and the increased pressure by capital markets for more efficient capital management.
Captive insurance has huge potential in Qatar, with Qatar Petroleum already having set up its own captive, the Al-Koot insurance company, in 2008 to meet its risk retention needs. The QFC Authority estimates that whilst there are currently eight captive insurance companies in the GCC region, there is scope for up to 70 more and the QFC will continue to issue licences to captive insurance managers as well as captive insurance companies. In September last year the QFC granted Kane LLC a licence to establish its captive management operations in Doha, demonstrating our its willingness to grant international captive managers access to the domestic market.
The QFC is actively encouraging the development of the captive insurance market in Qatar allowing 100% foreign ownership of financial services firms with neither restrictions on insuring risks nor foreign currency trading, while captive insurance companies also benefit from tax exempt status within the QFC. Under QFC rules, base capital requirements for captives range from US$150,000 to US$1 million.
In response to international developments, such as the Solvency II Directive, and an increase in demand for captive solutions, the Qatar Financial Centre Regulatory Authority (QFCRA) has recently published a consultation paper on a series of proposals to review the existing captive regulatory framework in Qatar. These proposals will provide the basis for a state-of-the-art regulatory framework due to be operational by Q3 2011 in which international captive managers will be able to conduct business.
The growing number of specialist captive managers in the QFC who are able to provide a comprehensive range of services to the market suggests that the captive insurance industry is set to show significant growth in Qatar in 2011, following the groundwork that has been made in 2010.
Director, Strategic Development, Qatar Financial Centre Authority (QFCA)
Akshay Randeva is a Director, Strategic Development at the Qatar Financial Centre Authority, where he is responsible for developing and implementing various strategic initiatives aimed at promoting Qatar as a regional hub for the asset management, reinsurance and captive insurance industries. more