DOUGLAS, Isle of Man—Isle of Man wants to capitalize on a trend among large employers to gain control over their international employee benefit plans by consolidating them into a single funding vehicle.

Multinationals in Europe and the United States have looked in recent years to consolidate such benefits as death, disability and, where allowed, health care benefits into captive insurers, experts say.

A more recent trend has been for companies in Europe, where regulations are less restrictive than the United States, to move pension benefits into captives, sources say. Such moves increase captive owners' control and reduce the cost of funding and administering benefits, experts say.

The Isle of Man is among domiciles trying to capitalize on those trends.

Isle of Man Finance, a government agency that promotes the island as a financial services center, has put together a working group of captive managers, pension administrators, life insurers and others to come up with ways to tout the jurisdiction's attraction as a place where international employee benefits can be funded through captives or other financial vehicles such as trusts.

“It seems to be a good fit,” said Derek Patience, chairman of the Isle of Man Captive Assn. and head of office at Marsh Management Services Isle of Man Ltd. “Captives here already are doing employee benefits in various guises depending on the needs of the owner.”

John Batty, business development manager at Isle of Man Finance, said the island has strong captive, banking, life insurance and other service sectors, and a dedicated regulator of insurance and pension activities, which he called a “major benefit” and advantage over other jurisdictions.

While other jurisdictions in the region may be stronger in some areas—Guernsey, for example, has more captives but cannot claim the same strength in life insurance services—none has the same combination of strengths in all financial services areas, Mr. Batty said.

Though Isle of Man is touting itself as the domicile of choice for international employee benefits, that decision will be based on more than the number of services offered, said Paul Kelly, London-based director of consulting services for Towers Watson & Co.

Captive owners will consider issues such as whether to locate within the European Union, treaties in place to avoid double taxation, fronting regulations, the regulatory regime and others, Mr. Kelly said.

Some of the impetus for moving benefits to captives is coming from the top of the organization and concerns about funding, said Paul A. Kiernan, managing director at Willis Management (Isle of Man) Ltd. in Douglas.

“CEOs are looking at it now” and asking risk managers to determine whether benefits should be funded by captives, Mr. Kiernan said. “CEOs are looking to consolidate those arrangements on a global basis rather than on an ad hoc country-by-country basis.”

“Traditionally, it's been almost impossible to write a single policy for things like death and health care benefits” because local regulations governing benefits differ around the world, he said.

A popular solution has been to fund international benefits through pooling arrangements that have agreements with local insurers in many parts of the world. Such an approach “has worked well,” but it does not give multinationals complete control over their plan operations, Mr. Kelly said.

“There is a very strong trend in Europe and the U.S. to bring captive insurance companies into play,” Mr. Kelly said. In fact, some large European and U.S. companies already are funding nonpension international benefits through captives, he said.

The move to fund pensions through captives, however, “is at an earlier stage,” Mr. Kelly said.

Increasingly, though, multinationals are consolidating their pension assets from different countries and reinsuring through a fronting insurer and into a captive, Mr. Kelly said.

There are disadvantages to the captive approach, however, and not all risk managers are looking to their captives as the complete solution to fund benefits.

Marco Terzago, risk manager at SKF Industrie S.p.A. in Airasca, Italy, said his company's Sweden-based captive is top-heavy with benefits for the employer's global operations and SKF is considering moving some of the business to a pooling arrangement.

SKF funds portions of its personal accident and executive life insurance benefits in the captive and works with local insurers that handle some of benefits, Mr. Terzago said. The company, a bearings manufacturer is concerned about aggregating its exposures in the captive and is looking into pooling arrangements that could take some of the strain off the captive, he said.