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Glossary
Business risk

Captive

Also: Captive company · Captive

Insurer or reinsurer owned by the business group itself, created to orderly retain part of its risk.

In practice

It makes sense when retention is already high, claims are stable, and the premium volume justifies the structure. Below that threshold, it is a governance cost that does not compensate: retention is better structured with aggregate deductibles.

Where it is addressed

This term is covered in Gestión del programa.

Related terms

RetentionPart of the risk that the company decides to assume instead of transferring to the insurance market.Annual aggregate excessAccumulated retention cap in the financial year: once reached, the insurer is liable for subsequent claims without deducting excess.FrontingAgreement by which a local insurer issues the policy required in its country and transfers the risk, through reinsurance, to the programme's insurer or the group's captive.First demand guaranteeGuarantee that obliges the insurer to pay upon the simple request of the beneficiary, without discussing the underlying relationship.Machinery breakdownCover that protects against sudden internal damage to equipment due to mechanical, electrical, or operational causes, without an external claim.General averageProportional distribution between ship and shippers of the sacrifice or extraordinary expense made to save the maritime expedition.
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