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Loss ratios are calculated by dividing the total losses paid by the captive by the total premiums earned by it. Example: • If a captive earns $1 million in premiums and pays out $500,000 in claims, its loss ratio would be 50%.

Losses or Claims that pay out very slowly, with Loss development. These are losses that arise from events that have a long latency period or a long settlement period. EXAMPLE: • Asbestos claims, exposure to coal dust.

Insurance taken on the vehicles used in business. Example., Trucks, Cars etc. The losses are in connection with accident and damage to the vehicles. Example: • Suppose you own a trucking company and one of your drivers causes an accident on the highway, injuring another driver and damaging their car. Liability-Motor Policy cover the medical…

A homogenous group captive is a type of group captive insurance that involves multiple companies from the same industry. Group captive insurance is a form of self-insurance where a group of companies form and own their own insurance company to cover certain risks. By joining a homogenous group captive, the companies can benefit from having…

A heterogenous group captive is a type of group captive insurance that involves multiple companies from different industries. Group captive insurance is a form of self-insurance where a group of companies form and own their own insurance company to cover certain risks. By joining a heterogenous group captive, the companies can benefit from risk diversification,…

This type of insurance covers the risk of being sued by someone who is injured or suffers property damage because of the business activities.Example: • If a customer slips and falls on the wet floor and breaks his arm, he can sue for medical expenses, pain and suffering.

General liability is a type of insurance that covers claims related to bodily injury or property damage caused by the company’s actions or negligence. Example: • A company’s delivery truck damages a customer’s garage door. The general liability would cover the cost of repairs or replacement.

Commission paid to the fronting insurer for fronting the insurance business. The fronting insurer is the original insurer with whom the parent takes the insurance and then captive takes reinsurance from the fronting insurer. Example: > If a captive pays 10% of the premium to a fronting insurer for issuing policies on its behalf, this…

Bank Account maintained with the third party to meet the claims payment requirement. EXAMPLE: • An Escrow Account is a third-party account that collects and pays your homeowners insurance and property taxes on your behalf.

It is designed to protect business from financial losses that may arise from accidents involving commercial vehicles. Commercial Auto Insurance can cover a wide range of vehicles, including delivery trucks, work vans, dump trucks, food trucks, service utility trucks, and box trucks. EXAMPLE: • If a business owns a fleet of delivery trucks and one…

Costs incurred for acquiring the insurance and reinsurance accounts such as Insurance taxes, Fronting commission, Brokerage etc., EXAMPLE: > Commissions paid to a Broker or Fronting company.

Written in connection with construction projects outside the United States, these nonstandard policies typically consist of three coverage parts. Example: • Suppose you are a contractor hired to build a new hotel in a foreign country. During the construction, a storm causes severe damage to the building and the material on site. Your CAR policy…

Fees paid to an intermediary for facilitating the transaction between the insurer and the captive. EXAMPLE: > If a group captive pays 5% of the premium to a broker for finding and placing business with an insurer, this is a Brokerage Fee.

A captive Insurance company is a legal entity formed primarily to ensure the risks of one corporate parent or a number of similar corporations(e.g., trade associations), there by contributing to a reduction in its parent’s (“total cost of risk”). Captives are licensed by many jurisdictions. The captive’s primary jurisdiction is known as its Domicile. Example:…

List of all incurred claims which includes payment and (OSLR) details. EXAMPLE: > A loss Bordereaux provides details on any losses and claims that have been made, and what amount the insurer has paid. A premium bordereaux lists all of the items that are protected under the reinsurance contract.

insurance written by an insurer licensed to do business in the state or country in which the insured exposure is located. EXAMPLE: • A captive insurance company registered in Oklahoma, USA that wants to cover its parent’s workers compensation risk in any other state in USA must obtain an admitted insurance policy from a licensed…

Subrogation refers to the proceeds of negotiation or legal actions against negligent third parties and may apply to either property or casualty coverage. Example: If there is a fire at one of the company’s facilities and the captive insurer pays for the damages, it can then pursue subrogation against the party responsible for causing the…

Re-Insurance premium written is the amount of reinsurance premium thata ceding company records on its books in a given period of time. Example: If a company B pays reinsurer C $100,000 for a reinsurance policy that coversthe year 2023, and the policy is issued and paid in January 2023, then company B’s reinsurance premium written…

Insurance written by an insurance company not licensed to do businessin a certain state or country. In US jurisdictions such insurers can nevertheless write coverage through an excess and surplus lines brokerlicensed in that jurisdiction. Example: Non- Admitted insurance can create specialty policies. They also cover higher-risk policies and ensure high-risk individuals who admitted companies…

Losses paid, or claims paid are the amounts that a captive insurance company pays to its insureds or to third party reinsurers for the losses that occur under the policies that the captive issues. Example:If Company A forms a captive insurance company, Captive A, to insure its ownrisks, and company A suffers a property damage…