A captive insurance company is set up by its parent to underwrite the risks of that parent company, its associated, affiliated and / or subsidiary companies and, in some cases, risks associated with the companies’ dealings with their customers.
Traditionally, captive insurance companies have been set up in offshore jurisdictions to ensure cost effective access to global reinsurance markets and to maximize investment potential for corporate funds retained within the captive.
Despite international competition, Labuan has had considerable success in attracting both international and domestic Malaysian captives. As at November 2008, 32 captives were resident in the domicile with premiums generated totalling USD187 million, a growth of 47% over the previous year.
Labuan has an aggressive approach to its expansion as a captive domicile based on:
A mature, pragmatic and business-friendly environment
Sound legislative and administrative structures
Well established international banking, investment and communication systems and
A broad range of experienced service providers
Captive insurance companies may be licensed to underwrite business in one or all of the following classes:
Protected cell captive
Examples of risks that have been managed by Labuan-domiciled captives include:
Marine (ships, barges)
Oil and Gas
Product Extended Warranty