Captives Look To Reinsure Benefits
NU Online News Service, March 27, 9:31 a.m. EST?A survey of captives finds a growing number are considering using their entities to reinsure their non-United States employee benefit programs.
Insurance broker Marsh and human resource consulting firm Mercer released a study that finds one in three captives are considering using their company to reinsure multinational pooling agreements for employee benefits outside of the United States.
Marsh and Mercer, operating companies of Marsh & McLennan Companies Inc., headquartered in New York City, conducted a survey of 96 captive owners in seven countries.
The firm said that, while 3 percent of captive owners currently use their pool for employee benefits outside of the United States, 29 percent said they "expect" to arrange such plans within the next two years.
Of those planning these pooling arrangements, 83 percent said they were going ahead with their plans to save money, while 58 percent said that the plan would improve global management of employee benefit insurance.
Fifty-five percent said they would reinsure the pooling arrangements to maximize the tax effectiveness of their captives, and 50 percent said they were looking to stabilize their risk portfolios.
Of the respondents, 35 percent said they had no interest in a reinsurance of the pools program. Fifty-six percent said they had more urgent priorities and did not want to pursue the strategy, while 38 percent said they were not convinced of the savings potential. Another 18 percent expressed concern about the time it would take to set-up and manage such a program.
The single greatest factor driving the business strategy for captives was reducing the cost of risk, with 87 percent of the respondents saying this was their primary goal.
Stabilizing their risk portfolio was noted by 59 percent of the respondents, followed by 38 percent saying they were looking to maximize their tax effectiveness, and 32 percent citing global management of insurance programs as their primary business strategy behind arranging captives.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.