Home / Insights / Captives in APAC help mitigate risk

insights-espresso-icon blog

Captives in APAC help mitigate risk

Espresso-live Speakers
by Abhipsa Samatra
1 January 2017

Captive insurance is one of the alternative methods of risk financing which helps companies lower their Total Cost of Risk (TCOR).

A captive is a licensed insurer who insures or reinsures the risk exposure of the parent, the affiliates, and/or other business associates. Buyers factor in premium volume, risk retention, loss ratio level and time lag between loss occurrence and payments to set-up captives in Asia. Other factors include premium risk distribution among countries and formal mechanism of risk retention.

Many Asian companies have diversified by owning insurable assets worldwide. Since the risk exposure varies across locations, a captive helps to capitalise on the organisation’s lowered volatility in its risk profile. The captive’s premium and loss data are centralised which helps measure the organisation’s overall risk management performance. The risk management department can become a profit centre, if needed.

APAC region is seen as an ideal destination for establishing captive units for all lines of business such as Employee Benefits (Life, Health & Disability Insurance), Property & Casualty and Liability Insurance. The major businesses insured by most of the large sized companies are pharmaceuticals, constructions and natural resources (oil, gas & mining).

Currently, Asia Pacific region accounts for about 5%-8% of the global captives. It is expected to grow manifold in the next 5-10 years due to favorable regulatory framework for underwriting risks and lower establishment cost.

Linkedin Twitter Facebook
Leave a comment

Please enter a valid name

Post your comment

Please select captcha


Get more stories like this

Subscirbe for more news,updates and insights from Beroe

Get Ahead with AI-Enabled Market Insights Schedule a Demo Now

Schedule a Demo Now