won't see cute, little ads with a duck or gecko for captive insurers.
Nor will you hear them being excoriated in whatever policy (pun
intended) debates are kicking around D.C. In fact, you don't really
hear much about them at all. Toolbox had never heard of captive
insurance before today, yet it's been around since the 1950s. And
everything Toolbox knows about captive insurers comes from today's
The Captive Concept,
by Arthur G. Koritzinsky (Marsh, Inc.). The first thing Toolbox learned
is that captive insurers are not insurance companies that are not even
being held hostage. Rather, they were the ingenious creation of
Frederic M. Reiss, who was representing the Youngstown Sheet & Tube
Co., (o.k., Toolbox got that part from Google) of Supreme Court
decisional fame. This original captive insurer was set up by the
company to insure its own mines. At its most base, this was kind of
Koritzinsky's submission provides "an introduction to the nature of captive insurers, the rationale behind their utilization and the process for bringing such an entity into existence." He explains captives, their advantages (financial and issuance), their disadvantages and the process by which one is established. In brief, "A captive insurer is a legal entity formed primarily to insure the risks of one corporate parent or a number of similar corporations (e.g., trade associations) thereby contributing to a reduction in its parent's total cost of risk." Companies establish them for any number of reasons, including
Toolbox likes the last one and is thinking of setting up Youngstown Hammer & Nail Captive Insurance, Inc. We'll figure out what it insures later.
The comments to this entry are closed.