NU Online News Service, April 29, 3:09 p.m. EDT

Marsh insurance brokerage said today it has established protected cell captive insurance facilities in Washington, D.C. and the Isle of Man.

The firm said the operations were created to provide small and midsize businesses with risk-financing alternatives, as well as larger firms looking for ways to segregate retained risks associated with joint ventures, strategic alliances and other special situations.

Marsh announced that both facilities have received approval of the regulatory authorities in their respective locations and are accepting business.

According to Marsh, protected cell captive (PCC) facilities are one of the fastest growing alternatives to conventional commercial insurance.

The brokerage said PCCs offer benefits similar to those available through group and single-parent captives but at significantly reduced start-up and ongoing costs. They also offer a shorter licensing timeframe, according to Marsh.

Individual businesses and other entities participating in the PCC are insulated from the loss experience, liabilities and credit risks of other participants, Marsh said. Consequently, they avoid potential costs, such as additional premium requirements or capital outlays, that could arise in group captive arrangements when other participating firms have poor loss experience or more volatile risk profiles.

Michael Cormier, a managing director of Marsh and global leader of the firm's Captive Solutions Practice, told National Underwriter that Isle of Man, a British dependency, was chosen because its location is for companies in the U.K. He added that there has been interest from U.K. companies in the PCC structure.

He also said other European domiciles will be considered in the future as needed.

In the United States, Mr. Cormier said Washington, D.C. is the only domicile that allows both incorporated cell captives (ICC) and PCCs. "Essentially, the maximum flexibility the domicile allowed us was what drove our choice to go to Washington," he explained.

Mr. Cormier said in a statement that a growing number of clients are seeking alternatives to the traditional insurance market, both to avoid "challenges associated with market cycles and to be in a better position to control their own destiny."

He noted that PCCs also provide larger firms an opportunity to test the waters of alternative risk financing without the potentially significant upfront investment of time and expenses associated with establishing a single-parent captive.

Marsh's new facility in Washington, D.C. is Mangrove Insurance Solutions PCC, and the Isle of Man facility is Mangrove Insurance Solutions PCC Ltd.

Captives are insurance companies formed by one or more corporations, associations, or government entities as formal mechanisms for self-insuring risk.

Such operations are regulated by insurance laws in states or countries where they are located and may be used to underwrite risks beyond those of the entities that own them, subject to applicable local regulations. A protected cell captive is a single entity in which individual businesses can purchase units or cells to retain and finance their own risk.

Legislation governing PCCs enables them to provide legal separation for each cell owner so that the financial performance, assets and liabilities of each cell are completely isolated from those of all other cells in the facility.

Special Reports /

Marsh Sets Up PCCs In D.C., Isle Of Man

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