Captives Insurance Guide: everything you need to know

A captive is a licensed insurance company that is established to act as an insurer for its parent company and subsidiaries.

It was not until the 1970s that the concept of captives started to gain traction as the hard insurance market at the time and difficulty in securing traditional insurance cover drove appetite for alternative risk transfer concepts.

Today there are around 7,000 captives established for a wide range of organisations wanting to pursue a long-term strategic approach to risk.

As part of a wider risk management program, a captive offers its owner more control and improved governance over its risk financing strategies. It provides a formalised framework and discipline to the funding of self-insured risks and wider access to reinsurance capacity for those risks it does not want to retain, smoothing volatility and resulting in a lower total cost of risk.

What’s in the guide?

In this guide, Lockton shares helpful insights on:

  • What a captive is and why they are formed

  • Common captive structures and how they work

  • Key strategies and considerations to factor into any decision on whether a captive is right for your business

  • Choices of domicile in the Asia Pacific region

  • How to set up and manage your captive

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Captives Guide: everything you need to know