How Single-Parent Captives Can Benefit from Captive Risk Pooling
Martin Eveleigh of Atlas Insurance Management explains the benefits of captive risk pooling. Many single-parent captives insure only the risks of just one or a few insureds and will be unable to achieve risk sharing. One solution involves the captive joining a risk pool. The benefits of captive risk pooling include volatility reduction, reinsurance protection, and offsetting reinsurance costs by sharing underwriting profits. With access to reinsurance, a captive may rely, in part, on other pool participants’ capital and surplus. Risk pooling also allows a captive to achieve risk distribution in order for it to be treated as insurance for tax purposes.