The road to 2017

New Year message from Malcolm Cutts-Watson, Founder & MD of Cutts-Watson Consulting Limited (“CWC”)

Well, what a year 2016 turned out to be! Political ballots dominated the news and the implications are reverberating into 2017.
Parochially, CWC enjoyed substantial growth in its first full year of operation. I am delighted with the team we have assembled with the additional bench strength of 2 highly experienced and well regarded consultants, Paul Wakefield and Graham Powell, joining the team. Our COO, Niall Lucas, has been busy bolstering our operational and marketing platform. His latest initiative is to refresh our website ( and I invite you all to take a look at the enhancements including a list of services we can provide to the various captive industry stakeholders. We are also active on LinkedIn and I encourage you to follow our posts, connect with us and join in the debate.
I wish to thank all of our clients for engaging us and we have built up a portfolio of diversified appointments which reflects the breadth and depth of knowledge we possess.
So onto 2017. What do I see as the key opportunities and challenges to the captive industry?
I was going to adopt the traditional approach of just looking forward a year but the magnitude of recent events advocates taking a longer view. As Winston Churchill said ”the further back you can look, the farther forward you are likely to see”. Focus to date has been on Brexit but I think we should be taking a wider perspective and consider the impact of other (maybe the majority of?) member states withdrawing from the EU. Certainly Italy, France and Ireland are likely to join Greece as top exit contenders. How should captive owners plan for the possible break-up of the EU and the abolition of cross-border passporting of services?
Of course, readers with long memories will remember there was a time not that long ago (less than 60 years ago) when the EU didn’t exist and its largest enlargement of member states occurred only in 2004. How did captives function then? By being offshore and utilising the services of a global insurance carrier with local territory presence to write the risk, handle local compliance requirements and reinsure to the captive. It’s a tried and tested model for multinational risks and allows both parties to focus on what they do best. I see this again becoming the captive programme design of choice, especially as the burden imposed by Solvency 2 on European captives is acknowledged. Time to foster relationships with the major carriers, many of whom contain specialist captive units ready to facilitate captive participation. Lloyds of London is set to announce in early 2017 where its EU centric underwriting hub will be established. Maybe there will be a need for several!
Other developments I foresee in 2017 include;

But there is no reason for despondency. The captive industry has met challenges before and continues to capture new opportunities, building upon its capacity for reinvention, innovation and flexibility. This is a time for wise heads to give counsel and show leadership. CWC looks forward to playing its part in drawing up the industry’s roadmap to success and facilitating a vibrant industry.
Finally I would like to thank Captive Review for including me as one of the inaugural inductees into its Hall of Fame. I am honoured to be so recognised and look forward to continue contributing to the industry in 2017 and you can read more here
Malcolm Cutts-Watson | January 2017

2 Responses

  1. Malcolm, thanks for a thoughtful piece on the challenges facing Captive owners and service providers in 2017. I was particularly struck by the fact you identify a new entrepreneurial post-Brexit UK, as a potential challenger to Offshore jurisdictions! What a strange world we all have to get used to! It makes the case for Captives as an indispensable risk-management tool.

  2. Nice piece, Malcolm. I think you’re right to highlight the UK’s venture into ILS as one to watch, but it seems to me there will have to be a real attitude change within the regulatory authorities to deliver and compete with the likes of Guernsey and Bermuda.
    Re Beps, there should be further development this year and some hope that the OECD will listen to the risk management associations when they meet at RIMS in April. That’s certainly going to be my main focus in 2017

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