Statistical assessment of risks and liabilities to inform premium setting and reserve adequacy, ensuring accurate pricing, reserving, and financial planning, and supporting captive's financial stability and solvency.

Provision for future claim payments and related expenses, based on statistical analysis and projections, ensuring captive's financial stability and solvency, and supporting adequate capitalization and risk management.

Uncertainty surrounding future claims costs and liabilities, assessed and managed through actuarial analysis and reserves.

Fee for captive management services, encompassing various operational and regulatory activities.

Situation where higher-risk policyholders are more likely to purchase insurance coverage, leading to unfavorable loss experience for insurers.

Maximum amount of coverage available under a reinsurance agreement for all claims during a specified period, providing financial protection against catastrophic losses and ensuring captive's solvency and viability.

Methods other than traditional insurance for funding and managing risk, including captives, risk retention groups, and self-insurance pools.

Mechanisms other than traditional insurance for financing and managing risk, such as captives, risk retention groups, and catastrophe bonds, offering flexibility and cost-effective risk management solutions.

Detailed preparation for internal or third-party audits, ensuring compliance with regulatory standards.

Yearly premium paid by policyholders into the captive, crucial for revenue forecasting.

Adjusts premium input for accurate financial forecasting, considering coverage changes and financial growth.

The projected annual adjustment in premium rates based on loss experiences, underwriting judgment, and economic conditions.

Yearly assessment of captive performance, ensuring alignment with strategic goals.

Captive's annual profit, essential for assessing financial health and strategic planning.

Thorough compilation and analysis of financial records for accurate and timely tax filing.

This is in contrast to "arm's length transactions," where the parties act independently and without any special relationship, ensuring that the transaction reflects fair market values and conditions.

Strategy for matching the duration and risk profile of assets with liabilities to minimize exposure to interest rate and liquidity risks, ensuring asset liquidity and stability, and supporting captive's financial sustainability and solvency.

Professional support for captive governance, enhancing transparency and accountability.

Jurisdiction where a captive insurance company is incorporated and licensed to operate, chosen based on regulatory and tax advantages, infrastructure, and business environment.

Assessment of the viability and suitability of forming a captive insurance company, considering various factors such as risk exposure, financial capacity, and regulatory requirements.

Process of establishing and licensing a captive insurance company, involving regulatory approval and compliance, feasibility analysis, and strategic planning, and ensuring legal authorization and regulatory compliance for captive activities.

Surplus management advice, optimizing reinsurance value and contingent capital access.

An insurance company established by a parent firm to insure the risks of the parent company or its affiliates. Captives offer control over risk management, claims handling, and insurance costs.

Professional firm providing administrative and management services to captive insurance companies, ensuring compliance with regulatory standards, and facilitating efficient captive operations, and enhancing captive's governance and performance.

Insurer that transfers risks to a reinsurer through reinsurance arrangements, outsourcing risk management and enhancing capital efficiency, and enabling captive to mitigate large losses and improve risk diversification.

Strategic advice for claims management, optimizing processes and reducing loss adjustment expenses.

Comprehensive management of claims handling operations for efficient and equitable resolution.

Number of claims filed over a specific period, indicating loss exposure and risk severity.

Unauthorized or excessive claims payments, resulting from fraud, errors, or inefficiencies in claims handling processes.

Funds set aside by an insurer to cover claims that have been reported but not yet settled, or incurred but not reported.

Streamlined claims setup processes, reducing administrative burden and enhancing client experience.

Average cost per claim, impacting overall claims experience and financial outcomes.

Period during which claims may be reported and settled, affecting captive's long-term liabilities, reserving needs, and financial reporting, and ensuring accurate estimation of future claim payments and liabilities.

Assets or funds pledged by captive to secure obligations under reinsurance agreements, meeting regulatory and contractual requirements, and ensuring reinsurers' confidence in captive's financial strength and creditworthiness.

A measure used to assess the profitability of an insurance entity, calculated as the sum of the claims and operating expenses divided by the earned premium. A ratio below 100% indicates an underwriting profit.

Contract between a captive and reinsurer to commute future reinsurance obligations for a lump-sum payment.

The expense incurred from purchasing reinsurance coverage to mitigate the risk of large claims exceeding certain thresholds.

Aggregated funds, including profits and reserves, accumulated over captive's operating years.

The amount that a policyholder is responsible to pay out-of-pocket before the insurer pays for any losses.

The jurisdiction in which an insurance or reinsurance company is licensed to operate. It is important for regulatory, tax, and operational reasons.

Choice of jurisdiction for captive formation, considering regulatory and tax advantages.

The portion of the policy premium that has been 'earned' by the passage of time, proportionate to the coverage provided.

A form of reinsurance that provides coverage when a set retention limit is exceeded, protecting insurers against high-severity losses.

Ratio of operating expenses to earned premiums, measuring operational efficiency.

Method of adjusting insurance premiums based on policyholder's historical loss experience, reflecting individual risk characteristics.

Reinsurance of individual risks where the reinsurer has the option to accept or reject individual risks presented by the ceding company.

An analysis conducted to determine the viability and potential success of establishing a captive insurer, considering financial, strategic, and regulatory factors.

Expert guidance during feasibility study, informing strategic planning and domicile selection.

Cost of feasibility study, covering actuarial analysis and regulatory consultations.

Fees associated with regulatory filings and approvals.

Rigorous evaluation of post-feasibility study financials to refine strategic decisions.

Analytical tool for projecting captive's financial performance under various scenarios and assumptions, supporting strategic planning, risk management, and decision-making, and ensuring captive's financial sustainability and success.

Agreement with a licensed insurer to issue policies and handle claims on behalf of a captive or self-insured entity, enabling access to regulated markets and facilitating risk transfer.

Licensed insurer that issues policies and handles claims on behalf of a captive or self-insured entity.

Period of high insurance demand and reduced capacity, leading to increased premiums and stricter underwriting standards.

Preparation and review of legal documents for captive incorporation, ensuring regulatory compliance.

Expert consultation on captive investment strategies, optimizing returns and compliance.

Earnings from captive investments, including dividends, interest, and capital gains.

Professional oversight of captive investment portfolios, maximizing returns and mitigating risk.

Annual return on captive's investment portfolio, influencing overall financial performance.

Legal counsel and support for captive-related events.

Strategic legal guidance for captive business plans and compliance frameworks.

Management of assets to ensure sufficient liquidity to meet short-term obligations and claims payments, balancing liquidity needs with investment returns and risk exposure, and maintaining captive's financial resilience and stability.

Reserve for post-claim adjustments, often set at 5% to cover unforeseen expenses.

Process of estimating ultimate claim costs based on past claims experience and current loss reserves.

Transfer of an insurer's existing claims liabilities to a reinsurer, typically through a reinsurance agreement.

Measures to identify and mitigate potential sources of loss, reducing claims frequency and severity, and enhancing captive's risk management effectiveness, preventing financial losses and preserving capital.

Ratio of incurred losses to earned premiums, reflecting underwriting performance.

Estimated amount set aside to cover future claim payments and related expenses, based on actuarial analysis and claims experience, ensuring captive's ability to honor its insurance obligations and maintain financial solvency.

External factors influencing insurance market dynamics, affecting captive formation and operation, and requiring proactive risk management, strategic planning, and adaptation to changing market trends and conditions.

Tailored advisory services addressing specific captive-related needs.

Business deals where the parties involved have existing relationships, which could influence the terms of the transaction. The parties might be related individuals (like family members), companies with common ownership, friends, or associates. Because of the personal connections, there's a potential for the terms of such transactions (like pricing, payment terms, or contract conditions) to not accurately reflect those that would be agreed upon by unrelated parties. This can lead to conflicts of interest or skewed financial outcomes that might not align with market or regulatory expectations, especially in contexts where fair pricing and independence are crucial, such as in financial reporting, taxation, and corporate governance.

Insurance coverage provided by insurers not licensed or admitted in the policyholder's jurisdiction, subject to different regulatory standards and taxation.

Costs related to the daily operations of an insurance entity, including administrative fees, underwriting expenses, and general overhead.

Insurance policy that entitles the policyholder to share in the profits and losses of the insurance company.

Efficient management of captive insurance policies, enhancing operational efficiency.

Facilitation of policy renewal processes for seamless continuity of insurance protection.

Return of part of the premium to policyholders based on favorable claims experience or surplus distribution by the insurer.

Excess of assets over liabilities, indicating captive's financial cushion and ability to cover claims, and supporting its long-term stability and growth.

Strategy for spreading investment risk by allocating assets across different asset classes, sectors, and geographic regions.

Tax imposed on insurance premiums paid by policyholders, varying by jurisdiction and insurance type.

Group of insurance policies with similar characteristics, often bundled together for underwriting and administrative efficiency.

Automated report generation for regulatory compliance, incorporating financial and claims data.

Mutual insurance arrangement where policyholders share risks and liabilities collectively, governed by a reciprocal exchange, providing flexibility and risk-sharing benefits.

Facilitation of regulatory approvals for captive operations.

Minimum capital required by regulators to ensure captive's financial strength and stability, providing a cushion against unexpected losses and ensuring compliance with regulatory standards.

Adherence to laws, regulations, and regulatory standards governing captive insurance activities, ensuring legal authorization, and regulatory compliance for captive operations, and avoiding penalties and regulatory sanctions.

Expert guidance on regulatory compliance and reporting requirements.

Submission of financial and operational data to regulatory authorities for compliance purposes, ensuring transparency, accountability, and adherence to regulatory standards, and maintaining captive's legal authorization and good standing.

Compensation for arranging reinsurance coverage.

Skillful negotiation of reinsurance terms for favorable arrangements.

Payment to reinsurers for risk transfer, tailored to captive's risk exposure and coverage needs.

Structure of reinsurance coverage tailored to captive's risk profile and strategic objectives, optimizing risk transfer, and ensuring adequate protection against catastrophic losses, and enhancing captive's capacity and stability.

Amounts due to captive from reinsurers for claims paid on behalf of policyholders, providing liquidity and cash flow support to captive's operations, and ensuring timely claims payments and financial stability.

Analysis and selection of reinsurance partners to optimize risk transfer.

Arrangement of reinsurance contracts and layers to manage risk exposure and volatility, optimizing risk transfer, and ensuring adequate protection against catastrophic losses, and enhancing captive's financial resilience and stability.

Market for insurance coverage for risks that cannot be readily placed in the standard insurance market, such as high-risk or hard-to-place risks.

Mechanism providing insurance coverage for high-risk or hard-to-place risks, operated by insurers or government entities.

Coverage protecting against loss of value for tangible assets, such as equipment or property, beyond standard insurance coverage.

Reinsurance of reinsurance, allowing reinsurers to spread their own risks and limit exposure to catastrophic losses.