captivevakuutusyhtiöt

Captive insurance companies, known in Finnish as captivevakuutusyhtiöt, are a form of self-insurance. They are companies established by a parent company or group to insure its own risks. Instead of purchasing insurance from a traditional third-party insurer, the parent company creates and owns its own insurance subsidiary. This captive entity then underwrites the risks of the parent company.

The primary motivations for establishing a captivevakuutusyhtiö typically include cost reduction, improved risk management, and access to reinsurance markets. By directly insuring their own risks, companies can often achieve lower premiums than those offered by commercial insurers, especially for unique or large risks. Furthermore, a captive allows for greater control over claims management and risk mitigation strategies. It can also provide a stable source of coverage, insulated from the fluctuations of the traditional insurance market.

Captives can be domiciled in various jurisdictions, both onshore and offshore, with each offering different regulatory and tax advantages. The formation and operation of a captivevakuutusyhtiö require significant capital and expertise in insurance and risk management. They are a sophisticated risk financing tool utilized by larger corporations and organizations seeking greater control and efficiency in managing their insurance needs.