PUBLISHED ON: February 2, 2010
For just about every risk manager these days, captive insurance is an option that is being considered if not already utilised. But with the options offered by captive structures come risks that many of those selling captive insurance products and services rarely broach with customers until a problem is at hand.
The problems can vary, ranging from fronting insurance companies overreserving claims to captive manager conflicts of interest to regulators seizing collateral accounts of captive insurance companies when fronting insurance companies go belly-up. While none of these risks can ever be entirely eliminated, there are steps policyholders and their captive insurance companies can take to mitigate these perils.