Page 70 - RISK Management IC86 Ebook
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Risk Management
established by a non- insurance parent company to insure the
risks of the parent company, its affiliates or other entities doing
business closely with the parent company.
Captives are considered to have a number of advantages over
traditional insurance coverage. Captives can also provide tax
benefits.
Risk retention groups
n These are similar to multi-owner captive insurance companies
or self-insurance groups. They are liability insurance
companies owned by their insureds and they are authorized
by the Liability Risk Retention Act of 1986, which permits the
insurance company - once licensed by its state of domicile -
to insure members in all states.
n These groups enjoy many of the benefits ascribed to without
the hassle of having to set up the corporate structure of a
captive insurance company as a subsidiary.
Alternatives to insurance products
Credit securitization
n This involves the transfer of assets subject to credit risk, such
as receivables, to a specially created investment vehicle (i.e. a
special purpose company).
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