Draft Insurance Conduct Standard Seeks To Regulate Third Party Cell Captives

At the end of July 2020, the Financial Sector Conduct Authority ("FSCA") published a draft conduct standard that will regulate cell captive insurers operating cell structures insuring against third party risks. The draft can be found here. The draft follows a long policy-making process. The period for comments to the FSCA closes on 22 September 2020.

What are third party cell captives?

As set out in the Insurance Act, 2017, a "cell captive insurer" is an insurer that only conducts insurance business through cell structures. In short, a cell structure is an arrangement under which a person (the cell owner) holds an equity participation in an insurer that entitles the cell owner to share in the profits and losses linked to specific insurance business placed or insured by the cell owner with the insurer (and that is contractually ring-fenced from the other insurance business of that insurer). Such cell structures can relate to "first party risks" or "third party