Captive Insurance

Captive insurance is becoming more popular in the shipping and energy/offshore industries.  Recently IY LEGAL has been assisting one of Europe’s largest vessel management companies pursue captive insurance arrangements for dry cargo vessels, as an alternative to traditional routes for insuring vessel risks.

Captive insurance companies are insurance companies specifically established to insure risks arising from a connected parent group or group of companies, or assets.  Generally, captives provide owners with more control over their insurance arrangements and cheaper access to marine and other forms of insurance. Typically, a significant marine operator or contractor might establish its own insurance company to handle its own risk management.  Maersk did this some years ago, for instance, and reportedly cut its insurance costs by one third.

Captives help a parent company manage a block of business. They also allow the parent company to respond quickly to changes in the commercial insurance market and to identify the most efficient way to finance an identified risk. This could mean lower coverage costs compared to conventional marine insurance markets. Captive are also ideal vehicles to obtain coverage for risks that are otherwise costly, or hard to insure, in the commercial insurance markets.  Captives also enable direct access to reinsurance markets, which can further reduce overall premiums.

Choice of domicile for a captive is important.  As well as the ever popular jurisdictions such as Bermuda, BVI, Cayman Islands, Isle of man, Jersey etc, there are a surprising number of jurisdictions, including in the USA, that have legal and regulatory infrastructure suitable for captives.

As marine insurance costs rise and it becomes ever harder to place certain risks, we expect more of the larger owners and operators to move towards Captive insurance models.

If you would like to know more about Captive Insurance in the shipping or energy/offshore sectors please contact Andrew Iyer at:  [email protected].

For more information about IY LEGAL and the legal services we can provide, please visit or call us on +44 (0)207 1007714.

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