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Abstract

A large organisation has the option of making arrangements inside the firm for the financing of risks (Captive Insurance), instead of insuring with insurance companies and at Lloyd's. The main methods of captive insurance are the self-insurance fund and the captive insurance company, the thesis being concerned with such processes only as applied within British corporations.

The thesis opens with an examination of the extent of use of such techniques in the United Kingdom, the conclusions being that about 45 companies had captive insurance companies when the study was conducted and that about 50 of the 250 largest British companies had some involvement with self-insurance. There then follows a study of the reasons why organisations form captive insurance companies, with an examination of the reasons given by companies that had considered the formation of such undertakings but had not done so.

The second main part of the study is concerned with the methods employed in forming and managing captive insurance facilities. The approaches to the assessing of the feasibility of these methods in particular organisations are discussed and attention is given to the question of whether firms underestimate the possibilities for self-insurance as an alternative to a captive insurance company. However, it was found that self-insurance was rarely used as a major strategy and most of the examination of methods of operation was restricted to captive insurance companies.

In view of the fact that most of the captive insurance companies formed in recent years were found to have been established in tax havens, considerable attention is given to domiciliary factors. The extent of use of tax havens both inside and outside the Scheduled Territories is examined; factors relevant to the various offshore countries are discussed, together with questions affecting the management of insurance companies in tax havens compared with domestic arrangements. There is comparison of undertakings managed by agents off-shore and self-managed facilities.

With regard to the internal management of captive insurance companies, administrative procedures for both off-shore and domestic undertakings are examined. The manner in which they deal with the risks presented to them for insurance is also discussed, including the physical examination of properties insured and the calculating of premium rates. Reinsurance strategy is an essential element in the management of a captive insurance company; the methods used and the policies followed are- given special attention.

The thesis closes with the presentation of a classification system for captive insurance companies with case studies, and a discussion of developments that might affect captive insurance in the future.

Publication Type:	Thesis (Doctoral)
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management H Social Sciences > HF Commerce H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Faculty of Actuarial Science & Insurance Doctoral Theses

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