Role, scope and operation of a captive insurance company in large technology-based multinationals: A case comparison

The boom of the so-called captive (re-) insurers which has taken place over the recent years is linked directly to the need to respond to the demands of firms for more advanced and sophisticated risk financing instruments which help them to become more efficient and effective in meeting their goals. The real needs and possibilities which each firm has for the utilization of this instrument must be specifically evaluated within the firm's global strategy. When dealing with the decision process leading to the establishment of an insurance captive, it is important to consider experiences and not models, given that these latter are not easily or automatically transferable to the reality of the firm, which is conditioned to an economic, political and legal environment which will not be exactly the same for any two firms. For this reason, a comparison is made of the experiences of two large technology-based multinationals in the establishment of a captive company, including differences in the role assigned to them within the group's strategy, their business scope and their operation.

Keywords:

• Captive Insurance Companies
• Risk Management
• Technology-based Multinationals