| What is a
Captive Insurance Company? |
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| In its basic form, a captive
insurance company is typically
an insurance company established
and owned by one or more
non-insurance organizations to
underwrite the risk(s) of their
owner(s). A captive can be owned
by a single entity, by a number
of unrelated companies from a
particular industry (a
homogeneous group captive), by a
number of unrelated companies
from different industries (a
heterogeneous group captive) or
by a trade or industry
associations (an association
captive) to insure the risks of
the group owners or association. |
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| Captive
Overview |
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Historical Perspective
In the early 19th century
through the 1960s, the most
popular line of coverage was
property. Early groups included
New England textile
manufacturers and other types of
factory owners. Other successful
groups included churches, bakers
and jewelers.
In the 1970s, many businesses
had difficulty obtaining
Products Liability Insurance,
and as a result, the Products
Liability Risk Retention Act of
1981 was passed into law. At the
same time, strong interest was
shown in establishing offshore
captive insurance companies,
particularly in Bermuda, to
write General Liability and
Product Liability Coverages. In
addition, the Liability Risk
Retention Act of 1986 was
passed, and encompassed all
liability coverages, not just
Product Liability.
Currently, casualty coverages
dominate the premium writings of
captives; however, since 9/11,
more property exposures have
been or are being placed in
captive insurance companies.
Captive Insurance Company
Statistics |
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Over
5,000 world-wide
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Over
300 formed in 2005
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At
Year-End 2005,
estimated premiums
written by captives
were $50 Billion
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By
Year-End 2005,
approximately 50% of
U.S. commercial
lines business will
be written in some
form of captive |
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Approximately 80% of
all captives are
pure (single-parent)
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Types of Captive |
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Pure (Single-Parent)
A pure captive insures only
the risks of its parent and its
affiliates. Groups include
industrial groups, professional
groups, associations and risk
retention groups. |
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Protected Cell
Provides a non-owned captive
facility for those who choose
not to form their own captive;
but for a fee can obtain many of
the same benefits an
owned-captive offers. |
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Agency
Agency-owned captives enable
an agent(s) to share in the
profits generated by their own
business. The agent(s) control
which business is placed in the
captive, thereby enhancing the
opportunity to generate
significant profits. |
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Special Purpose
This type of captive offers
those who do not fit any of the
foregoing captives' definitions
with the opportunity to benefit
from a captive structure. Not
all domiciles permit this form
of captive. |
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| Captive Organizational
Form |
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Stock
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Mutual
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Reciprocal
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Non-Profit
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| Benefits
of a Captive |
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What Are the Benefits of a
Captive Insurance Company?
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Gain control of
overall insurance
program |
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Secure coverage
availability and
capacity |
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Achieve
stabilization of
premium |
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Establish focused
loss control program |
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Obtain tailored
claims
administration |
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Set risk selection
standards (do not
take "all comers")
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Gain direct access
to reinsurance
market |
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Realize underwriting
and investment
income |
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| Ready to
Take the Next Step |
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| Contact Us |
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Richard P. Marshall
President & CEO
NBIS Captive Management
Services, Inc.
7047 E Greenway Parkway
Suite 250
Scottsdale, AZ 85254
Phone: (602) 952-9532
Fax: (602) 952-8789
1700 Overlook III
2859 Paces Ferry Road
Atlanta, GA 30339
Phone: (866) 835-6915
Fax: (770) 257-1718
Email:
dick@nbis.com
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