Captives as Risk Transfer Mechanisms focuses on how captives are used when risks are transferred between risk takers to improve risk financing efficiency. It discusses the types of risk that can be placed in a captive, techniques used to quantify risk and develop insurance rates, the underwriting processes, and how reinsurance is used to protect the captive. The course highlights the flexibility of captives in financing risk on or off balance sheet and reviews approaches like finite risk protection, loss portfolio transfers, and special purpose vehicles.

• recognize the risk management purpose of using a captive to finance an entity’s risks, identify the elements of captive insurance, and recognize why a captive can insure many types of risks
• distinguish among various types of captive insurance companies from a risk financing perspective
• identify factors to be considered in evaluating the cost of risk and recognize the various ways in which the costs of financing risks through a captive can be lower than the costs of commercial insurance or self-insurance plans
• recognize the ways in which captive insurance and other risk financing methods can smooth the financial impact of risk
• identify the types of reinsurance and the value that reinsurance can bring to captives