Self Funding & CaptivesA Captive Insurance company is the most common used vehicle to self insure risks.
Self Funding & Captives
A Captive Insurance company is the most common used vehicle to self insure risks emanating from either its parent company and/or its parent company’s customers, employees or other related parties, where a formal structure is needed for regulatory, accounting, contractual or other purposes.
Other commonly used risk self funding mechanisms include risk pooling arrangements, rent-a-captive accounts and managed funds.
Typically captives and other self funding mechanisms are established by businesses with significant insurance premium expenses, to minimise the cost of risk financing, by reducing the transfer of risk to the insurance market in the “dollar swapping” layer of risk and thereby retaining profits that would otherwise be passed onto the insurance market.
Premiums paid to a captive insurance company are usually deductible as a business expense for tax purposes whereas sums set aside in an informal self insurance fund are not.
Other key benefits of forming a captive insurance company include:
Significant Cost Benefits
The ability to retain more risk as the captive matures, to provide significant cost benefits in a hardening insurance market.
Access Wholesale Reinsurance
The ability access wholesale reinsurance markets directly.
Issue Insurance Policies
The ability to issue insurance policies for risks that may be uninsurable in the conventional insurance market.
Wallace McLean offers consulting advice on captive feasibility, domicile selection, formation, and strategic review health checks of existing captives including expansion, consolidation or liquidation options and processes.
Wallace McLean offers truly independent advice on captives as we will not act as insurance brokers and captive consultants for the same client which is a conflict of interest. Brokers that offer their insurance broking clients advice on the use of captives can be adversely influenced by any potential reduction in income from insurance placements.
Areas of speciality:
- Risk Management
- Self Funding options
Nigel has extensive broking experience with particular expertise in the placement of large and difficult risks. Nigel has worked for multinational risk brokers for 20 years and his own companies for 10 years. In his role as General Manager of Aon Risk Services he provided a strategic review and designed insurance programmes for many of their larger clients.
DDI: +64 9 358 7235
Mobile: +64 21 226 8515
Brian joined Wallace McLean in 2016. Starting his insurance broking career in the 1970’s, Brian brings extensive knowledge and experience specifically in the Retail Industry placement of large commercial property programs, managed self-insurance funds and product liability for the Pharmaceutical Industry. Brian has owned and managed successful insurance broking practices, and among other broking innovations, Brian also pioneered the Film Production Insurance Industry in New Zealand.
Simon joined Wallace McLean in 2005 after 4 years’ experience starting in the insurance broking sector followed by Commercial Underwriting in the New Zealand insurance broking market.
Areas of specialty involve the structuring and placement of Property & Construction risks, Self Storage risks and associated specialty lines, Manufacturing, Liability risks as well as global and local risk management & placements..
DDI: + 64 9 358 7233
Mobile: +64 21 686 014
Johann van der Merwe
Johann has over 12 years of commercial insurance experience.
Prior to working in insurance Johann worked as a Management Accountant in London.
Transferring of risk, be it through insurance or contract, intrigued him and he soon completed his Associate of Charted Insurance Institute.
Johann has extensive knowledge in the placement and servicing of Property, Marine Cargo, Public Liability, Contract Works and Alternative Risk Management programmes.
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