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IN SUMMARY Growth in captive insurance company
business has primarily originated from the Property & Casualty sectors of
the insurance industry. The advantages captives offer are difficult to match
with other established risk financing techniques. This is borne out by the fact that the
majority of the insurance company organizations formed stick with it once
they choose to enter a captive insurance company self-insured
arrangement. A successful captive
insurance company offers; greater pricing flexibility, broader coverage, more
closely tailored services, and more control over claims handling and other
insurance related services and activities than the conventional commercial
insurance company industry. These
benefits remain the same, regardless of the insurance pricing available in
the commercial market. A new source of growth in captive
insurance companies will most likely come from the employee benefit sector of
the labor market. In 2000, the
Department of Labor changed its prohibited transaction stance on the use of
captive insurance companies to insure employee benefits such as short and
long-term disability and employee group term life insurance. This change has cleared the way for other
companies to meet certain less restrictive conditions than previously applied
to use captives for this purpose. This
will open a whole new market to the captive insurance company self-insured
industry. |
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F.
Darrell Lindsey State
Approved Captive/RRG Manager |
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