The last hard market I remember occurred in the mid-1980s. The face of the insurance industry looked very different then. Almost overnight reinsurers decided to withdraw capacity, especially for liability lines, and big players like AIG found themselves with greatly reduced limits. Back then, it was almost a case of waking up one day to a hard market, whereas today we're seeing a gradual change in market conditions. Some effects of the hard market of the 80s are still with us, and flourishing.
Captive insurers have many uses and come in many forms.
In the current market, however, as rates increase and capacity dries up, many agents and insureds will turn to the captive concept as a potential solution to these problems. The purpose of this article is to give you a feel for what works and what doesn't work in a captive setting. First, a quick captive overview. Single-parent captives A captive insurer can be owned by a single parent, such as a large multinational company, and used to consolidate the parent's multinational insurance program. The captive brings consistency of pricing and coverage to facilities located all over the globe, not to mention unbundled claims handling and loss prevention.