Captive Insurance Management
The conventional insurance market can at times be a cumbersome and inflexible risk management tool. Moreover, the traditional risk transfer mechanism is susceptible to conflicts of interest between the needs of the policyholder to derive value from their insurance and the needs of the insurance company to deliver value to its shareholders.
Creating a captive insurance company provides a bona fide self–insurance mechanism, which can offer a superior alternative to traditional insurance products, whether for the whole or part of your insurance programme. Captive insurance can either be achieved by the creation of a wholly owned insurance subsidiary or by using a cell within a PCC, which offers similar self–insurance facilities. The advantages fall into two categories:
- cost–effective risk transfer — where the traditional market is applying high rates, restricted cover, increased deductibles or limited capacity.
- opportunities to retain underwriting profit — due to better than average loss performance or niche and profitable portfolios of insurance business.
The ability to develop a degree of insulation from the unpredictable swings of the insurance market cycle is often a key driver in forming a captive for our clients — many of whom have experienced this negative impact firsthand. Additionally, benefits such as direct access to the reinsurance market, positive cash flow, capital leverage, investment income, bespoke cover and low cost base all stack in favour of captive formation.
Self–insurance is suitable for:
- all large corporations and insurance buyers
- property owners
- lawyers
- accountants
- insurance intermediaries
- associations and buying groups and
- high net worth individuals.
Heritage Group Limited, PO Box 225, Heritage Hall, Le Marchant Street, St Peter Port, Guernsey, GY1 4HY. Telephone: +44 (0) 1481 716000 Regulations