Market
Captive insurance companies are a popular and sophisticated risk management tool for organisations seeking greater control over their risk profile.Captives are insurance entities that are created and owned, directly or indirectly, by individual organisations. A self-insurance mechanism, captives allow risk-savvy parent companies to secure a depth of coverage often not available in the general insurance market, help reduce overall insurance spend and reward companies with a superior loss records.
Today, there are approximately 5,000 captive insurers in operation around the world, providing cover for a wide range of perils. A significant number of Fortune 500 companies have their own captive.
Traditional captive centres, such as Bermuda, Dublin, Guernsey and Vermont, remain important locations, but have been joined by a new generation, including Gibraltar and Malta in Europe and Bahrain, Dubai and Qatar in the Middle East. These newer domiciles have capitalised on the desire of some parent companies to move their captives closer to home.
Captives can be applied to most areas of insurance if the risk is clearly defined. For example: public, product and operating liability; terrorism and natural hazards; professional indemnity; employers liability; contractors all risks; property damage and business interruption. Consideration may also be given to other defined perils for which traditional insurance may not be available or affordable.
We at Kane believe that captives pose an increasingly compelling argument in the face of an ever more volatile commercial insurance market.