Shipping Captives
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What is a captive
A captive is an insurance company created and wholly owned by a parent company—often a shipowner, operator, or maritime group—to insure its own risks. Instead of purchasing all coverage from the commercial market, the company forms its own regulated insurer, giving it direct control over underwriting, claims handling, and long‑term risk strategy.
In the maritime industry—where exposures are complex, global, and often volatile—a captive allows a company to tailor insurance solutions to its fleet profile, operational footprint, and risk appetite. It becomes a strategic tool, not just a financial one.
How a captive works
A captive operates like any licensed insurance company, but with a single primary client: its parent group.
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Risk Identification & Underwriting
The maritime company identifies the risks it wants the captive to cover—such as hull & machinery deductibles, P&I layers, cargo liabilities, pollution exposures, or operational risks unique to its fleet. -
Premium Funding
The parent pays premiums into the captive. These premiums are actuarially priced and regulated, but they reflect the company’s own loss history rather than the broader market’s volatility. -
Claims Management
When a covered loss occurs, the captive pays the claim. This keeps claims data internal and allows the company to manage incidents with greater transparency and speed. -
Reinsurance Integration
Captives often buy reinsurance to protect against catastrophic or high‑severity maritime losses. This gives the parent access to global reinsurance markets at wholesale rates.
Capital Accumulation
If claims are lower than expected, the surplus stays within the captive, building reserves that can be used for future losses, expansion of coverage, or strategic investment
How a Captive Helps a Shipping Company Save Money
A captive operates like any licensed insurance company, but with a single primary client: its parent group.
-
Risk Identification & Underwriting
The maritime company identifies the risks it wants the captive to cover—such as hull & machinery deductibles, P&I layers, cargo liabilities, pollution exposures, or operational risks unique to its fleet. -
Premium Funding
The parent pays premiums into the captive. These premiums are actuarially priced and regulated, but they reflect the company’s own loss history rather than the broader market’s volatility. -
Claims Management
When a covered loss occurs, the captive pays the claim. This keeps claims data internal and allows the company to manage incidents with greater transparency and speed. -
Reinsurance Integration
Captives often buy reinsurance to protect against catastrophic or high‑severity maritime losses. This gives the parent access to global reinsurance markets at wholesale rates.
Capital Accumulation
If claims are lower than expected, the surplus stays within the captive, building reserves that can be used for future losses, expansion of coverage, or strategic investment
