When it comes to risk management, the adage "Failing to
plan is planning to fail", rings truer than most. Risk
management is vital in any business, and when a more cost-efficient
and customisable alternative to outright insurance purchase is
sought, captive insurance ticks all the right boxes.
Globally, captives are the most prominent instrument for
Alternative Risk Transfer (ART) market. The ART market allows
companies to procure coverage and transfer risk mechanism without
resorting to commercial insurance purchase.
The rise of captives
As described by the Insurance Information Institute, a captive
is a special type of insurance company set up by a parent company,
trade association or group of companies to insure the risks of its
owner or owners. Starting with captives, the alternative risk
transfer market later included risk retention groups (RRGs) and
insurance pools. The number of captives has doubled in the last 20
years with recent figures by rating
