This course discusses the concept of “cost of risk” (COR) )—how to quantify it, reduce it, and structure a program that will reduce its financial impact on the risk takers. The objective is to demonstrate how captive insurance can be used to reduce these costs. It provides an overview   what a captive is, how it can be used to reduce the cost of risk, and the different types of captives that are in use today. It also reviews the various functions that must be performed by a captive to be effective and delves into the tax and accounting issues that impact the effectiveness of a captive in managing the financial impact of risk. 

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
• distinguish among various types of captive insurance companies
• understand 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
• recognize the ways in which captive insurance and other risk financing methods can smooth the financial impact of risk
• identify factors considered in determining whether premiums paid to a captive are tax-deductible