Captive аs аn Insurance Formula for Risk Management: Advantages and Disadvantages
Journal Title: Вісник Київського національного університету імені Тараса Шевченка. Економіка. - Year 2017, Vol 2, Issue 191
Abstract
This article introduces subject of an insurance captive entity, with focus on how it could be used as insurance formula for risk management. Captive might be the most appropriate insurance formula for risk management. However, the level of achieved success depends on many factors.Insurance captivesare understood as entities which are formed and owned by companies mostly for the purpose of insuring own risks (pure captive or single parent captive). More and more often captives are also formed by a group of companies (group captives) to insure their properties and liabilities towards 3rd parties. Captives are widely used by many companies nowadays. However, many of them,are used solely for a purpose of a risk cession and premium transfer, with an intention to use captivesmore as a profit center in a low taxation country rather than for the purpose of risk management (i.e. a more appropriate role for captive would be to support their owners in enterprise risk management – ERM). This article touches on why captives are not used to their full potential. It may be toochallenging for many decision makers to embrace on captives as risk management formula and extend captives' roles to utilize all possible advantages resulting from owning a captive. Captive can deliver risk management in a more comprehensive way than most commercial insurers on the market. The article also presents advantages and disadvantages of owning an insurance captive.
Authors and Affiliations
Holly Romuald, Greszta Ernie
Keywords
Related Articles
- EP ID EP235285
- DOI 10.17721/1728-2667.2017/191-2/2
- Views 106
- Downloads 0
ECONOMIC NATURE AND THE ROLE OF NATURAL RESOURCES PAYMENTS UNDER SUSTAINABLE ECONOMIC DEVELOPMENT
Ukraine has various and, at the same time, powerful naturally-resource potential like mineral, landed and recreational resources. Uneven allocation of resources for territories of the country in that time entailed the co...
THE ESSENTIAL FOUNDATIONS OF EFFECTIVE FUNCTIONING OF FOOD SECURITY MECHANISM
In the current economic conditions, the implementation of the food sector development programs and effective functioning of the food supply lead to the need to improve the implementation tools of food security mechanism....
EVOLUTION OF THEORETICAL APPROACHES TO ENTERPRISE RISKS ANALYSIS
Modern state of the Ukrainian clannish-oligarchic economy can be characterized in the terms of extraordinarily high degree of riskiness that makes actual use of scientifically based approach to the entrepreneurial risk m...
IMPROVING YOUTHS’ SOCIAL SITUATION IN THE EUROPEAN UNION
The European Union’s social policies of the last years aimed at improving the social conditions of youths across Europe. The goal of this paper is to comparatively analyse the characteristics of youths and their social c...
TYPOLOGY OF REPRODUCTION OF ECONOMIC INTERESTS OF ACTORS
At the modern step of economic development, there is a need for scientific substantiation of the possibilities for resolving contradictions and conflicts of economic interests of actors, searching for tools and mechanism...