The development of Bermuda's insurance market post World War II has been phenomenal. The Bermuda reinsurance market is the third largest globally, ranking only after London and the United States. The first reinsurance company was established in Bermuda in 1948. In the early 1960's Bermuda pioneered the captive insurance concept. It is not proposed to examine the reinsurance industry in detail here.
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A captive insurance company is typically owned by an organisation whose primary interests are unrelated to the business of insurance. By definition it is the risks, or a portion thereof, relating to the operation of the parent, and which the parent is free to redirect, which a captive will insure. The application extends beyond the single-parent captive underwriting risks of related companies. Owned by unrelated parties, used for programs too small to justify incorporating their own captive or where separate ownership may be important for fiscal reasons. Formed by members of a common occupational, production or service group in order to spread risk among its members.