Captives and the traditional insurance market

In recent years, the captive insurance industry has witnessed a tightening of tax regulations, which have decreased the overall profitability of the captive vehicle. In light of this changing environment, it is critical that the modern captive adds strategic, as well as financial value, to its parent company. Chris Charman , managing director, Thomas Miller Risk Management (UK) Ltd, says it is increasingly important that captives are more effectively integrated in the parent company’s overall risk management strategy, instead of being used mainly as a means of funding deductibles.

Captive insurance companies are now a well-established part of the insurance scene and have evolved to meet the challenges of international enterprise risk. Captive insurance companies first emerged to take advantage of the favourable taxation opportunities offered in off-shore locations.