Captives as Risk Transfer Mechanisms

Course Details

This course is not subject to discount pricing.

Additional Credit Available:

Optional Insurance CE
Optional CPA CPE

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Exam Requirements

Proctor Required: 


Passing Grade: 




Please note: Adding Additional Credit may change exam requirements.

Course Description
One of the captive's roles in the risk management process is to assist in financing risks. Risk can be financed using noninsurance or insurance techniques. Organizations that retain risk may choose to self-finance it, which reduces some risk financing costs but eliminates some of the benefits they derive from insurance. To persuade large commercial buyers to continue to use insurance, traditional insurers offer a variety of cash flow and profit sharing insurance plans. These risk financing solutions may provide some of the advantages of self-insurance, but the insured may lose some of the benefits of insurance. Captive insurance is designed to maintain the advantages of self-financing and insurance without the disadvantages of commercial insurance. Captives as Risk Transfer Mechanisms focuses on how captives are used when risks are transferred between risk takers to improve risk financing efficiency. The captive user will learn about the insurance techniques used to underwrite risk and the underwriting processes used to ensure that a risk will be adequately financed.

Learning Objectives
This is an intermediate level course. Upon completion, students will be able to:

  • 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;
  • recognize key differences between captives, commercial insurance, and self-insurance plans;
  • 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;
  • recognize the nonconsolidated options that enable captives to move liabilities from one balance sheet to another; and
  • recognize the advantages and disadvantages of the various nonconsolidated options.

An understanding of risk financing principles and how the insurance industry is structured

CPE Field of Study

Management Services

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International Risk Management Institute, Inc. (IRMI), is the premier provider of risk and insurance continuing education and reference services. IRMI was the first publisher of reference content covering the field of risk finance in 1983 with the publication of Risk Financing, a comprehensive reference resource on all aspects of traditional and alternative market approaches. IRMI is also publisher of the first newsletter to cover the field of captives, Captive Insurance Company Reports; two comprehensive books on the subject of captive insurance; and, the first and foremost information resource and networking center on the Internet for the alternative market. Use the knowledge you gain from IRMI CE courses with confidence, knowing they are written by seasoned risk and insurance professionals who employ diligent quality assurance standards to provide the most up-to-date, practical, and reliable information possible.