Captive of insurance

The concept of prisoner of Assurance is employed here in a very broad meaning. It gathers 4 types of prisoners of insurance:

- A captive of Assurance strictly speaking, or captive of direct insurance is a company Filiale, created by the company, which will play the part of a traditional insurer, by guaranteeing the risks only supported by the company. It perceives premiums of the holding and pours allowances in the event of disasters, in accordance with the traditional diagram of the insurance.

- The captive of Réassurance utilizes an operation of fronting. The insurances of the company are managed by one or more insurance companies of the market which are reinsured near the captive company of reinsurance controlled by the assured company or the group.

- The captive account (rent-have-captive) consists of the hiring of a “account” near an insurance company having a prisoner subdivided in compartments. Following the example bank account, each compartment representative of a captive account is independent. The rented account is affected with the company. The versed premiums are affected on this account and the allowances of disaster are taken there. It is a solution much more accessible, the assured company not having the responsibility of set up a specific structure and to support management of it.

- The captive Mutuelles are captive companies held by several companies (or groups), not having a bond between them but showing common characteristics: even branch of industry, same types of risks. The mutual prisoner creates a primary financial equalization between her members who will be advantageous for them insofar as the contributions collected make it possible to face the disasters and or the total sinistrality remains lower than the average.

Origins

It is difficult to determine with exactitude the first legal assembly and financier who could constitute the premises of a prisoner of insurance. The phenomenon is at all events, incontestably, of Anglo-Saxon origin.

It is usually allowed that the prisoner of insurance existed in a certain form since the years 1870 when first “Protection & Indemnity clubs” were created.

In 1893, an american company, the Commercial Company Credit, off creates American Credit Indemnity New York, subsidiary company having for single social object to ensure the risks of its parent company. In 1899, the National Mutual Church Insurance Company is consisted General the Conference off the Methodist Episcopal Church.

In Europe, the first prisoner of insurance in 1920 is created, in Great Britain, Imperial Chemicals Insurance Limited, is followed in 1937 by Blackfriars Insurance (Unilever group). The latter was based in Great Britain and was subjected to the general regulation of the insurance companies.

In France, the assembly rather is ignored, but is not ignored: in 1930, the companies Peugeot and Citroen had obtained approval for the creation of an insurance company.

Thus, the real emergence of the prisoners of insurance begins as from the years 1960. Until there, only a hundred captive companies had been created in the world. Moreover, the term even of “prisoner” is charged to Fred Reiss who constitutes in 1962 a management company in Bermuda and invites many his customers to train prisoners of insurance. It follows a rapid growth and exponential of the phenomenon. One counted approximately 1000 prisoners of insurance in the world in 1977, more than 2000 into 1989,3000 into 1993,3600 into 1995,4800 in 2002.

Which was the release of this phenomenon?

The reasons which led to the creation as of these prisoners remain first today. They were indeed an effective answer to a hardening of the market of the insurance as from the years 1970, primarily of the difficulties related to the insurance of civil responsibility for the production companies.

The most outstanding fact is undoubtedly the accident of drilling of Santa-Barbara (California) which has occurred in 1969. The licenses of oil exploration and production representing of the expensive investment, the companies were to be contained in “joint venture”. The insurers had considered the risk maximum at 150 million dollars without to have thought which there could be an office plurality of complaints in the event of disaster. Those went on the oil companies, following the accident, with an amount of 500 million dollars.

Vis-a-vis the refusal of the insurers to guarantee the position risk, like with the governmental requirements granting the user licenses realizing an engagement of unlimited liability, several oil groups gathered to form in 1972, a mutual prisoner, the Oil Insurance Ltd.

The French group Total, member of the Oil Insurance Ltd, was however to support franknesses from several million dollars by disaster, which could have compromised the financial balance of certain small subsidiary companies; it thus decides to found its own prisoner of insurance, the Omnium Insurance and Reinsurance Co Ltd, recorded in Bermuda in 1973, one of the first French prisoners and who functions always today.

By concern of competitiveness, but also following the report which the premiums poured with the insurer were more important than the perceived allowances, the Elf Aquitaine group also creates in 1979 its own prisoner of insurance, domiciled in Bermuda: Alphega Insurance Ltd.

Today, the French large companies are increasingly numerous to create prisoners of reinsurance: much chose to install their prisoner in Luxembourg for reasons which we will detail in the continuation of our study. The phenomenon also interests of SME having become a fundamental tool of risk management.

Internal bonds

  • GAREAT

  • National school of Standard insurances
  • Sinistralité
  • of contracts of insurances

External bonds

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