Motivations behind a captive will differ from company to company, however in recent years the primary consideration lies with using a captive as a strategic risk management tool, allowing the risk manager to focus on their job and not insurance renewals. Additional benefits of a captive include:
- Insure risks where there is limited capacity in the commercial insurance market;
- Set a stable premium to give certainty in the budgeting process and protect against increases in the commercial insurance market;
- Create a profit centre to share in underwriting profits;
- Control claims data and use this to improve the operational efficiency of the company; and
- Access the reinsurance markets, providing additional and potentially lower cost capacity.
We complete projects for clients across the globe and regularly utilize our global captive network to ensure the best results for our clients. Below are a couple of recent projects we have completed:
- A captive feasibility study for a global construction group. Our actuarial team reviewed their insurance program’s historic loss ratios to set optimum deductible and reinsurance trigger points. We reviewed 6 potential domiciles for the captive with input from our tax team. Recommendations included detailed plan for the captive’s structure and how it could operate. Following the board’s approval we completed a business plan and financial projections for the captive before submitting them to the regulator. We worked closely with the client to ensure the captive was ready to commence underwriting following the regulator's approval.
- We helped a company re-locate their captive from Gibraltar to Bermuda. Initially we comprised a shortlist of potential domiciles for the captive listing the benefits and challenges of each to allow the client to make an informed decision. We then worked with the client and the regulator to complete the transfer.
Please contact us if you have any queries.