Captive insurance will be a new focus for the Dubai International Financial Center (DIFC) as it seeks new ways of handling risk in the current economic climate.
“The DIFC has positioned itself as the principal domicile for the advice, consultation and implementation of insurance and captive solutions in the region,” said Abdulla al Awar, the managing director of the DIFC Authority at a conference in Dubai [CK].
“Given the current global economic conditions, an increasing number of organisations are investigating the adoption of innovative solutions to enhance their overall insurance programme and risk management framework.”
Captive insurance is a risk management technique where a business forms its own insurance company subsidiary to finance its retained losses in a formal structure. The company covers its parent group’s risks and sometimes the group’s customers. The term “captive” comes from the fact that the policyholder owns the insurance company. Among the advantages of captive insurance is that cash flow is protected as reserves for unpaid claims and unearned premiums can be held by a captive and invested.
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