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Who should have a Captive? |
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| Any organization whose cost of risk justifies the expense of establishing and operating a captive is a contender. Whether through dissatisfaction with the traditional insurance market or because of long term investment objectives, a captive is a relatively inexpensive vehicle through which to transfer risk and take advantage of cash-flow and financial planning opportunities.
Many of the captives in the BVI have premium revenues of as little as $350,000 annually but of course many are substantially in excess of this. Classes of coverage written may include conventional and unique programs and many captives retain little risk, choosing instead to buy catastrophe reinsurance to limit their financial exposure. Some captives are formed simply as deductible reimbursement vehicles where funding of frequent non-catastrophe losses may be more economically handled than by perpetuating ‘exchange of dollars’ arrangements with traditional insurers. Perhaps the most successful type of captive is the company with a stable long term history that demonstrates a consistently low loss ratio. These companies that have spent vast sums of money with traditional insurers would probably have done better investing their premiums in their own captive, building up underwriting surpluses each year and progressively reducing their dependence on reinsurance each year. AMS Insurance Management Services Limited
Sea Meadow House, Road Town, Tortola, British Virgin Islands Tel: (284) 494-4078 - Fax: (284) 494-2519 E-mail our Insurance Deparment |
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