Analysis: Why Cruise Lines May Find Captives Attractive

A captive insurance vehicle can be an attractive option for a cruise line, and Bermuda is a premier 'home port' for such vehicles, according to Gavin Woods, counsel, and Matthew Ebbs-Brewer, senior associate at Appleby.

A captive is an insurance company that has been formed to provide insurance for the risks of a company or group. A captive comes in several guises: it may be a wholly-owned company that insures the risks and exposures of its parent or affiliates; or it may be owned by unrelated shareholders and insure the risks of any of those shareholders and, subject to certain limits, the risks of unrelated persons.

Historically, captives have been formed by organisations (or groups of organisations) that found the conventional insurance markets failed to meet their financial needs, especially in terms of price, service, cover and capacity for certain types of risk. Many of the traditional reasons for wanting to form a captive and the related benefits apply