User:Melissa F/sandbox

I would like to contribute to the existing article Captive Insurance by including the following information:

Background

Add which companies are more likely to take advantage of insurance captives (corporations making $10M to $15M annually) and what it

enables them to do. Include definitions of key terms that are/will be used throughout the article (parent company). Include a list of reasons

why captives increase business value (access to reinsurance, less volatile than commercial insurance, ability to cover

unique risks, etc.) Breaking out the types of captive into sponsored/non-sponsored and including examples of each below each heading

(group, association, PCC, etc.)

Cells

Include separate section on cells with intro (how they work), advantages and possible disadvantages. In addition, I would like to give an

example of how capital paid in can affect the cell.

Highlights Debates/Controversy

Compare advantages and disadvantages of using insurance captive. According to experts, what type of consumers should be wary of joining

a cell or starting a captive. Include any issues with regulation of domiciles onshore v. offshore [would need to research]

Emerging Research

This is not a topic with a lot of emerging research, however, I will be looking through sources (most likely on Forbes and other business sites)

to update what has been happening lately in the insurance captives market.

External Links

Add links to Forbes and sites with info on captive insurance.

Types of Cells

There are many variations of how captives can be set up, which can be broken into two categories. The first, category is known as non-sponsored in which the company is the creator a beneficiary. Within that category the most common are single-parent or “pure”, group and association. The second category is sponsored in which the captive is owned and controlled by another company that allows other companies to “rent” insurance.  This category includes Protected Cell Captive Insurers and Rental Captives.

Intro

A Captive is an alternative to self-insurance in which the parent company creates a licensed insurance company to provide coverage for itself. The main purpose of doing so is to avoid using traditional commercial insurance companies, which have volatile pricing, and may not meet the specific needs of the company. By creating their own insurance company, the parent company can reduce their costs, insure difficult risks, have direct access to reinsurance markets, and increase cash flow. When a company creates a Captive they are indirectly able to evaluate the risks of subsidiaries, write policies, set premiums and ultimately either return unused funds in the form of profits, or invest them for future claim payouts.

Domiciles

Onshore or offshore domiciles are places that allow for captives to be formed. The captives are then regulated by local insurance authority agencies, which require that captives have enough money to pay claims as well maintaining a minimum surplus.

Sites Used

http://www.captive.com/resources/captive-insurance-basic-information-index/protected-segregated-cell-rental-captives

http://www.naic.org/cipr_newsletter_archive/vol2_captive.htm

http://atlascaptives.com/captiveadvantages.html

http://wiki.captiveinsurance101.com/index.php/Main_Page

http://www.forbes.com/sites/jayadkisson/2013/11/16/cell-captives-and-the-recycling-of-capital/#72aa00c1f923