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Key benefits of establishing a captive insurance company

Key benefits of establishing a captive insurance company

17 February, 2022
Global Capital Markets Captive Solutions

Sherman Taylor, Client Director details the key benefits of an effective captive insurance company and why it is an attractive option for businesses.

What are the benefits of creating a captive insurance company?

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 insurance company extends beyond profit considerations, and the current insurance hard market cycle has created new industry buzz about captives.

The benefits for the captive owner can include:

  • 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
  • Greater control over policy limits
  • Greater control over deductibles and coverage
  • Quicker claim handling
  • Direct access to reinsurance markets
8 Benefits of establishing a captive insurance company

The ability to influence pricing is another benefit of owning a captive. Large rate increases were evident in the latest round of insurance renewals, and it is unlikely that rate will come down in the near future as insurance and reinsurance companies are still dealing with the impact of major loss events spanning the past four years. It is highly anticipated that pandemic losses will exacerbate the situation and drive even more interest in captives.

If you are thinking of establishing one, read more about the key factors to consider when establishing a captive insurance company.

Captive solutions

Our captive solutions team provide a suite of legal, 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 needs, please contact our captive solutions team.