E-Tutorial on Captives Released

Malvern, Pa. – Members of the CPCU Society (Chartered Property Casualty Underwriter designation) now have access to an online tutorial that offers fundamental information about captives, the association reports. In its CPCU Society's May CPCU eJournal monthly electronic publication, "Captive Insurance Industry-What is it? Where is it? Why is it Important?," the association attempts to explain the mysteries of the captive insurance industry in plain English, starting with the history of captive insurance, the differences between captive insurance companies and traditional insurance companies, and the future market for captive insurance. The issue was written by Dennis Childs, CPCU, ARM, AMIM, ARe, RPLU, ASLI, MSIM. Childs is currently assistant vice president, commercial lines, product development, for Ohio Casualty Group. He received his CPCU in 1986 and has 35 years of experience in the insurance business in various underwriting and marketing roles with national carriers. Childs holds a B.A. degree from Transylvania University, and an M.B.A. from Boston University, with a specialization in insurance company management. Childs says that captive insurance companies have several definitions, but for the purposes of this article, he uses the following, from Kathryn Westover of the International Risk Management Institute: "A captive insurance company is a company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, the primary beneficiaries of its underwriting profits are its insureds.” Beginning with the history of the captive insurance industry-with the first captive formed in Bermuda in 1963-Childs explains the multiple reasons behind the formation and subsequent growth of the captive insurance industry. He says the primary reason for the increase in popularity of this form of insurance was "the failure of the traditional insurance companies to meet the needs of an ever-growing and complex business unit." Childs also explains where the more popular captive domiciles are located and why captive insurance companies are important to the insurance industry and to commerce in general. Some current market status facts that Childs presents include the following:* There are 4,355 captive insurance companies worldwide.* Bermuda is the leading captive location of domicile, with 1,400 captives.* Currently 65 percent of Fortune 500 companies utilize a captive to meet at least one or more of their insurance needs.·        Tillinghast estimates that the captive market now has $30 billion in annual premiums, and $130 million in assets worldwide. Childs concludes with some comments on what the future may hold in this area of insurance, saying "to meet the needs of corporate risk management for innovative and unique solutions to individual risk management, the need for captive insurance solutions will continue." The CPCU Society is headquartered in Malvern, Pa. Source: CPCU Society