Magazine article Risk Management

A Captive Web

Magazine article Risk Management

A Captive Web

Article excerpt

Some say the captive movement began back in the 1920s in the United Kingdom, when Imperial Chemical Industries formed a wholly-owned insurance subsidiary to protect the risks of its parent company--the traditional definition of a captive. This definition is distinct from buying insurance through an industry group captive, which is how the mutuals were originally operated. Imperial's formation, however, like the insurance companies formed by U. S. corporations in the next three decades, was not made under any special captive laws because those laws didn't exist at the time.

The term "captive" was actually coined by Fred Reiss, founder of the International Risk Management Group. In the United States, Reiss began forming insurance companies for his clients--Youngstown Sheet and Tube being the first--again not with special captive legislation, but under good old general commercial insurance laws and regulations. In 1962, Reiss went down to Bermuda with Sidney Pine of LeBoeuf, Lamb, and persuaded the Bermuda authorities to allow the formation, by private act of Parliament, of insurance companies.

When the United States jumped on the captive bandwagon, Colorado was an early contender. That state, however, never attracted much business because its captive laws were much like regular commercial insurance regulation. Vermont, in 1982, saw the opportunity to take advantage of changing tax laws, including such issues as inter-company loans and excise taxes. Today Vermont has made itself into the premier onshore captive domicile, even while Bermuda and other offshore locations remain major draws.

There is much captive-related information on the Web. The real chore, as it so often is, is sifting through what is and isn't useful.

Captive.com is the most comprehensive site on everything captive, with information on domiciles, service providers and conferences, captive news headlines, and more. Most organizations serving the risk and insurance industry are located at or linked to this site.

Michael Maglaras & Company sponsors Captive News, a useful resource for current information. (At last glance, there was an interesting and entertaining update and comparison of Bermuda and Vermont. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.