IFRS 17 and Italian captives: a regulatory development with strategic significance

By Michele Ungaro, Head of Large Corporate, Howden SpA, and John Rowson, Managing Director, Captive Services, Howden

A recent Italian regulatory development could make the creation of an Italian captive simpler to assess for some multinational businesses. The point is nuanced, and it will not affect every captive owner. But for Italian-headquartered groups, or businesses actively considering an Italian captive, the continued evolution of Italy's insurance accounting and reporting framework is worth understanding.

For most risk and finance leaders, IFRS 17 is not a new topic. The standard has been effective since 1 January 2023 and has already reshaped how insurance contracts are valued, reported and explained. However, in the captive and alternative risk financing space, its practical implications continue to evolve.

Recent developments in Italy make this topic increasingly relevant

For a business, deciding where to establish a captive, regulatory clarity matters. So does administrative efficiency. If a domicile's local regulatory reporting framework is closely aligned with international accounting standards, compliance can become easier to manage and explain across finance, risk and governance functions.

Italy's recent work to update its insurance accounting and reporting framework appears to move in that direction. IVASS launched Consultation No. 3/2026 on amendments to ISVAP Regulation No. 7/2007 concerning the financial statement formats and disclosures applicable to insurance and reinsurance undertakings adopting international accounting standards. The consultation was issued on 9 April 2026 and closed on 8 June 2026. Market participants are currently awaiting the final measures. The proposed changes update reporting requirements to reflect developments relating to IFRS 9, IFRS 7, IFRS 18 and certain IFRS 17 disclosures.

It should be noted that IVASS may amend, narrow or delay elements of the current proposal in response to market feedback. This article reflects the direction of travel indicated by the consultation documents as currently drafted; however, the final measures may differ and could affect the operational conclusions discussed below.For prospective Italian captives, the importance of the consultation is principally operational rather than conceptual. While it does not in itself eliminate all distinctions between statutory and IAS/IFRS reporting requirements, it may contribute to greater alignment and simplification of reporting obligations for insurers applying international accounting standards.

Why this matters now

Captives are often formed because a business wants greater control. A well-designed captive can help an organisation retain risk more intelligently, access reinsurance capacity, finance difficult-to-place exposures and build a more disciplined view of its total cost of risk. It can also create a structured mechanism for emerging and evolving risks that may not sit comfortably in the traditional insurance market.

But captives also require commitment. They need capital, governance, actuarial input, regulatory engagement and long-term strategic alignment.

At Howden, we are clear that captives are not right for everyone. As a general indication, our captive services guidance identifies prime candidates as businesses with annual premium spend of £750,000 or more, a loss ratio of less than 50%, a strong balance sheet and a long-term commitment to risk financing and risk retention. 

That is why accounting and reporting requirements matter. They influence the operating model. They affect the business case. They shape the way senior stakeholders, auditors, regulators and boards understand the captive's value.

A captive may sit inside the risk function, but it will not succeed without finance, tax, legal and treasury alignment. IFRS 17 sits directly at that intersection.

Looking beyond the numbers with IFRS 17

IFRS 17 was introduced to increase transparency and reduce inconsistency in the accounting treatment of insurance contracts. EIOPA has described its implementation as one of the most significant accounting developments affecting insurance undertakings in recent decades.

The standard also has clear overlaps with Solvency II. Both frameworks use concepts such as market-consistent valuation, probability-weighted future cash flows, discounting and risk adjustment. However, they serve different objectives. Solvency II is designed for prudential supervision and policyholder protection, while IFRS 17 is intended to provide meaningful financial information to investors and other users of financial statements.

Implementation has required significant investments in data, systems, governance and actuarial processes. Industry experience has highlighted continuing differences between IFRS 17 and Solvency II, including valuation approaches, contractual service margin treatment, discounting methodologies, contract boundaries and risk adjustment calculations.

For many non-life captives, the operational impact of IFRS 17 has been moderated by the availability of the Premium Allocation Approach (PAA). Nevertheless, compliance has still required enhanced processes, controls and reporting capabilities.

For large insurers, these challenges may be absorbed within established finance and actuarial infrastructures. For captives, the balance can feel different. Many captives are intentionally lean organisations. They are designed to support a group's risk financing strategy rather than replicate the infrastructure of a large commercial insurer.
This makes proportionality particularly important. Captives often operate with relatively simple business models and lower transaction volumes than traditional insurance carriers, making efficient implementation and reporting requirements a key consideration.

So, when regulatory developments improve reporting efficiency without weakening transparency, governance or supervisory oversight, they deserve attention.

Is Italy becoming more attractive for captives?

Italy has not historically been the first jurisdiction many multinational groups consider when discussing captives. More established captive domiciles such as Luxembourg, Guernsey and Ireland often remain more familiar to boards and advisers.

But captive domicile decisions are evolving. Businesses increasingly seek structures that align with their operating footprint, regulatory environment, capital strategy and stakeholder expectations.

For Italian-headquartered groups, or multinational organisations with substantial Italian operations, an Italian captive may therefore deserve a more prominent place in the discussion.

The reporting developments currently under consideration are unlikely to be the sole reason for choosing Italy. Nor should they be. Domicile selection should always consider regulation, governance, capital requirements, licensing timelines, tax considerations, local expertise, proportionality and long-term strategic fit.

However, greater alignment between Italian insurance reporting requirements and international accounting standards could improve administrative efficiency and simplify certain aspects of financial reporting for insurers operating under IAS/IFRS frameworks.

It gives risk and finance leaders one less area of potential complexity to address when assessing captive feasibility. It also provides advisers with a clearer basis for comparing Italy against alternative domiciles.

What risk and finance leaders should do

For businesses considering an Italian captive, this is not a call to rush. It is a call to review. The first step is to understand precisely how current and future IVASS requirements apply to the proposed structure. The relevance of the developments will vary depending on the captive's business model, ownership structure and accounting framework.

The second step is to revisit the business case. As reporting frameworks continue to evolve, assumptions used in earlier feasibility studies may warrant reassessment.

The third step is to involve the right stakeholders early. Captive feasibility should not sit solely within a risk management function. Finance, tax, treasury, legal and insurance specialists should all be part of the discussion from the outset.

IFRS 17 has reinforced a broader lesson: captives are strategic vehicles, and their reporting framework plays an important role in supporting strategic decision-making. Finally, businesses should compare Italy against alternative domiciles with discipline. A captive domicile is not simply a regulatory address. It is a component of the operating model.

Howden's view

At Howden, we see captives as one of the most effective tools in modern risk financing. Used correctly, they can help businesses take greater control of their risk strategy, improve resilience and optimise long-term financing costs. That is particularly relevant for multinational and complex organisations.

Through our Multinational Clients Practice, we combine global reach with local expertise, bringing together specialist teams across Large & Complex Risks, Global Corporate Risks, Captive Services and the Howden One Network. 

For captive owners and prospective captive owners, that integration matters. Captive strategy cannot be separated from global programme design, claims management, analytics, reinsurance strategy, local regulatory compliance or board-level risk appetite. Italy's latest reporting reforms are technical developments. But technical developments often have strategic implications.

If the direction of travel reflected in the IVASS consultation is confirmed in the final regulatory measures, Italy may become an increasingly attractive option for organisations considering a captive insurer, not because IFRS 17 becomes less relevant, but because reporting requirements may become more closely aligned with international financial reporting standards and operational realities. The opportunity is therefore not to assume that the regulatory debate is settled, but to reassess Italy's position within the broader captive domicile landscape.

To discuss whether an Italian captive should form part of your risk financing review, speak to Howden Captive Services on [email protected] 

At the time of writing, IVASS Consultation No. 3/2026 remains subject to completion of the regulatory process. The observations in this article regarding potential operational benefits for captive insurers are based on the consultation documents currently available and should not be interpreted as confirmation of the content of any final IVASS measures. Accordingly, the observations regarding potential operational benefits and reporting simplifications should not be interpreted as confirmation of the content or effect of any final IVASS measures.