Captive Insurance Company deals with the risks related to Insurance
as a whole. It is related to the insurance companies or be it related to
direct customers. Captive Insurance these days is becoming the most
popular type of risk eliminating cure, people have become more conscious
and so these types of insurance companies help customers to lower their
risk factors while investing in their insurance policies. To make it
clear here given below are briefed definitions of terms related to it:
- Captive Insurance:
there are several types of meaning been given to this term by its
father names as Frederic M. Reiss, who started this service basically
for captive mines but further when he outgrew his company he started
providing this insurance policy to other industries as well but with
similar term. His first client was the Youngstown Sheet in 1950s, this
company dealt with mines that were solely used for corporations use only
as Captive Mines.
- Origin or domicile:
Captives have been given license by many jurisdictions these days
including Bermuda which is world’s leading captive abode due many
advantages related to it, The Bahamas, Dubai, Ireland etc. are further
added in this list, though basically offshore financial centers are
given priorities mainly.
- Business capacities:
Captive Insurance was introduced to provide large corporations and
industries benefits of insurance they required but in association with
mainstream insurance markets, it could not reach its fuller growth. So
it had to and was pushed to reduce its cost. Captive insurance had its
limited market and areas covered by it.
- Rules and Regulations: It has its own set of regulations and restrictions that must be followed by Captive as well as reinsurance companies with prior responsibilities.
Importance of Captive Insurance: For so many years big corporations and industries have enjoyed the advantages of Captive insurance companies
in so many ways these were mainly been made up to avail the advantages
in places where insurance benefits were not present or were indecently
overpriced. Though captive insurance risk management advantages were
quite basic but their tax related advantages were important mainly these
days not only large businesses and corporation but also small scale
industries have started to take benefits of captive insurances so as to
get more and more profit and to learn all the risks related. Captive
insurance provides so many benefits and advantages including tax saving
opportunities also including estate tax savings for shareholders.
