A Captive Audience

Originally Published in Post Magazines SMEs Supplement, July 2007

There was a time when it would have been safe to assume that captive insurance was the preserve of large international organisations. However, innovation in the sector has meant that the advantages it offers have become more accessible and therefore relevant for small to medium sized enterprises (SMEs).

Pure captives

A captive, in its purest form, is a company set up by its owners primarily to insure the risks of its parent (and/or subsidiaries). This can offer several advantages in comparison with insuring through the commercial market:

• The insuring of unusual or catastrophic risks or multiple small risks
• Avoid subsidising large overheads and profit margins of commercial underwriters