Captive reinsurance

RISKASSUR article of Tuesday June 20, 2023

A recent decree passed as part of the 2023 Social Security Financing Act has eased the financial and tax conditions for companies wishing to set up reinsurance captives in France. With this new decree, it is now possible to create a reinsurance captive under conditions comparable to those existing in Luxembourg.

Edouard de Lamaze, Founding Partner of the Carlara law firm (Carbonnier-Lamaze-Rasle) explains, “These new rules offer serious opportunities for many French companies faced with increasing insurance policies”.

Until now, captives – legal structures enabling companies to create their own insurance structure to self-insure against their own risks, with a view to reducing insurance policy costs (margin gain, tax gain, usage gain) – have suffered from disadvantageous taxation.
Companies wishing to set up such captives had to do so in Luxembourg. In fact, this was an option rarely chosen by French companies.
With this decree, the system is now fully accessible in France, and many companies are starting to take the plunge. Reinsurance captives, in their new tax guise, can be of great interest to groups with substantial insurance risks, wishing to improve the efficiency of their operations.