Access to otherwise unaffordable or unavailable coverage;
Direct access to the reinsurance markets to obtain
wholesale premium quotes;
Improved cashflow and investment return;
Increased incentive for loss control;
Greater control over claims;
Underwriting and retention funding flexibility and
reduced cost of operation;
Greater focus on risk management and risk financing
activities of its parent organization; and
recognizable profits for the captive.
Highlights of forming a captive in New York:
Both Pure and Group Captives are permitted.
Reasonable capitalization requirements that may be
met with a letter of credit - Entities with a net worth of at least $100
million can form captives in New York.
Capitalization: $250,000 for pure captives and $500,000
for group captives.
Allows coverage of nearly all commercial property/casualty
lines of business (excluding title, mortgage guaranty and financial guaranty
insurance).
Financial responsibility coverages can be written via
assumed reinsurance; excess or direct indemnity programs for these coverages
may be done on a direct basis.
A captive may assume reinsurance with approval of the
Superintendent.
Minimal restrictions on investments (in excess of capitalization)
allowing loan-backs to parent and/or affiliates.
No guaranty fund or residual market participation.
Competitive tax/assessment rates. See NYS
Tax Law.