A surprise jurisdiction is preparing to challenge the world’s leading domiciles for captive insurers.

Hot on the heels of Britain giving notice that it was to launch a consultation this spring about the design of a new framework for encouraging the establishment and growth of captive insurance companies in the jurisdiction, a politician in the Western Canadian province of Alberta has also thrown down the gauntlet.

Nate Horner, the province’s finance minister, said in a statement: “The introduction of captive insurance in Alberta provides businesses with another option for insurance coverage and makes Alberta a more attractive destination for investment.

“Alberta’s business-friendly environment continues to prove itself, offering a unique advantage for businesses seeking effective risk solutions in a challenging global insurance market.

“I am proud that we are one of only two provinces [in Canada, along with British Columbia] to provide the captive insurance option.

“Since becoming a captive jurisdiction in 2022, Alberta has licensed 17 captive insurance companies and is prepared to welcome more.

“Furthermore, it provides an additional insurance option for businesses that may struggle to find the right coverage at a manageable cost through traditional insurance providers.

“As more captives are established in Alberta, we expect to see a growing hub of specialised skills, including experts like captive managers and actuarial services.”

Mr Horner added: “After less than two years, Alberta’s captive insurance programme now rivals those found in already established and globally recognised captive jurisdictions like Barbados, Bermuda and Vermont.

“In fact, only a few months after legislation was passed, a captive insurance company moved from Barbados to Alberta.

“In conversations I’ve had with folks from industries such as hospitality, transportation, construction and farming, companies are choosing Alberta as their captive jurisdiction for several reasons, including our six-week turnaround time for licence approvals and low costs that are more favourable than accessing offshore captives.

“In addition, Alberta’s captive insurance programme allows companies to cover business risks from outside the province within Alberta.

“Companies have also told us they have an easier time navigating our captive regulation because Alberta’s Superintendent of Insurance is easily reachable, responsive to feedback and prudent in its reviews.

“With ongoing interest from diverse industries, Alberta’s government will continue to ensure that our captive insurance environment thrives and that businesses view Alberta as a top destination for risk management.”

Alberta has some way to go to challenge Bermuda and other leading captive domiciles, despite Mr Horner’s optimism.

Bermuda, the Cayman Islands and Vermont are widely acknowledged as the most popular domiciles for the setting up of captives.

Of about 7,000 captives globally, up from just 1,000 in 1980, Bermuda and its two closest rivals make up about one third of the total.

More than 70 jurisdictions now have some form of captive legislation.

In Britain, the London Market Group has been exploring “the case for designing a competitive UK captive insurance regime”, as outlined in its September 2023 document: A Plan for the Future: The Successes Achieved and the Next Steps Forward.

LMG represents the insurance and reinsurance market in London, and is expected to be a significant party to the government consultation.

Together with captive owners and market experts, it has already met with the City Minister to discuss captive insurance and explore the case for designing a competitive British captive regime.

The report noted: “There are no captives based in the UK, as it is seen as an unattractive location. UK regulators treat them the same as an insurance company, although they pose a very low risk to the overall financial system and indeed can help companies manage their own risk profile more effectively.

“It is however a rapidly growing global market, with [approximately] 7,000 captives worldwide and captive premium at [approximately] $69 billion, which is estimated to reach $161 billion by 2030.”