01
Jan
1998

Captive Insurance Companies: Going to Oz - The Culture Shock

Policyholder Advisor & Alert

 Share  print   Print     Subscribe      Download PDF

PUBLISHED ON: January 1, 1998

An American business
that self-insures by
forming a captive
insurance company is in for
a culture shock like Dorothy
experienced in Oz, but without
a happy ending. The tornado
will hit when claims-paying time comes.
There is a big difference between being a policyholder
dealing with insurance companies and
owning or renting a captive. Putting a captive
between the policyholder and real insurance
transforms the policyholder into an insurance
company. The treatment the former policyholder—now
insurance company—receives from
insurance companies and reinsurance companies
is entirely different.