Page 84 - Reinsurance Management IC85

Reinsurance Management

Q. What are Captive Insurance Companies?
What are the types of captives and advantages
of forming a captive?

Ans: Captive Insurance Companies are formed by large
industrial and commercial companies primarily to
write the insurances of their parent companies and
subsidiaries.

This enables the group to retain smaller losses for its
own accounts, with only XL protection, thus retaining a
large portion of the premium within the group. Some of
them write inward reinsurance business for obtaining
wider spread of portfolio.

They are mostly established in tax heavens like
Bermuda. They have formed Reinsurance Pools for their
clients and write both reciprocal and non-reciprocal
international insurance business.

The captives form their bases in places where
the investors are given tax concessions by
the local governments. There are over 4000

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