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Key benefits of establishing a captive insurance company

Key benefits of establishing a captive insurance company

In part one of this three-part series shining a spotlight on the establishment of a captive insurance company, Managing Director - Bermuda, Alison Dyer details the key benefits of an effective captive and why it is an attractive option for businesses. 

A well-run captive can be an effective risk management tool, reducing group insurance costs for the captive owner. However, the commercial rationale for incorporating and establishing a captive extends beyond profit considerations.

Benefits for the captive owner include:

•    Greater control over policy limits
•    Greater control over deductibles and coverage
•    Quicker claim handling
•    Direct access to reinsurance markets
•    Control over cashflow and timing of premium payments
•    Transfer of insurance-related administrative tasks to the captive
•    Coverage for risk excluded by the conventional insurance market
•    Gains from investment of accumulated capital

The ability to influence pricing is another benefit of owning a captive in the current market where successive health, environmental and climate disasters are affecting the balance sheets of insurers and reinsurers, driving up rates. This year started with major loss events such as the Australian wildfires and, at this point, there is no consensus prediction on the full effects of coronavirus.

In part two of the series, I will highlight the key elements to consider when looking to establish a captive.

Captive solutions

Our team provide a full suite of administration and fiduciary services to the ILS and captive market from our Bermuda, Cayman and BVI offices, ensuring that all structures remain compliant with applicable regulations in each jurisdiction. We add value throughout the life cycle, from incorporation and licensing, to unwinding and voluntary liquidations when the structure ends its natural life - precision and technical expertise has been the hallmark of our service offerings to this important global industry. 

If you would like to discuss how we could support your captive needs, please get in touch via my profile below or learn more here.

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