Brief Guide To Captive Formation

The basic steps involved in taking a decision to set up a Guernsey captive are outlined within a comprehensive brochure entitled the Guernsey Insurance Guide, copies of which are available free of charge from the Financial Services Commission.

A potential applicant should first undertake, preferably with the help of a member of the Guernsey Insurance Company Managers Association, an in-depth, risk management analysis of their insurance business over at least the last five years detailing premiums paid per class of business and claims per underwriting year for each class of business. An analysis of what are known as 'iceberg costs' is also needed.

To identify whether all or some of an applicant's particular risks might be better managed through a change of policy the following should be considered: rapidly fluctuating premium levels; escalating costs; difficulties in placing risks; potential for future risks; constantly changing insurers; an excellent low claims history; a new