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24 Insurance and risk transfer > Captive insurance companies - Pg. 267

Insurance and Risk transfer 267 There are also compliance concerns related to whether a policy is admitted/ approved/accepted within every country where the organization has operations. This can sometimes form a restriction on the operations of captive insurance com- panies. Certain countries may not accept the validity of an insurance policy written by a non-admitted insurer, including a captive insurance company. Captive insurance companies A captive insurance company is an insurance company owned by an organization that is not otherwise involved in insurance. The purpose of a captive insurance company is to provide insurance capacity for the organization by using its internal financial resources to fund certain types of anticipated losses or insurance claims. The organization that owns a captive insurance company is often referred to as the parent of the captive, or simply the parent organization. In general, captive insurance companies are domiciled in a location that has a favourable regulatory and accounting regime that encourages the establishment of captive insurance companies. Domiciles for captive insurance companies include Guernsey, the Isle of Man, Gibraltar, Malta, Luxembourg, Bermuda and Ireland. The nature of captive insurance companies can vary quite widely. In theory, such a company may write insurance business directly into other countries, although com-