Captive Insurance is a financial service that involves the formation and operation of an insurance subsidiary by a parent organization to self-insure its own risks or those of related entities, offering risk financing, cost control, and alternative risk transfer solutions.
Main/
Captive Insurance
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Code
PS0055
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Name
Captive Insurance
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Version
1.0
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Category
Insurance & Risk Management
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Created
2025-03-15
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Modified
2025-04-02
Related Techniques
Captive insurance services are exploited by criminals who channel illicit funds through self-owned insurance companies. By inflating premiums or fabricating claims, they are able to mask the true origin of the funds and integrate them into the financial system. FIs find it challenging to detect such activities due to the legitimate appearance of these entities and the complexity of their ownership structures. Enhancing scrutiny on premium payments and claims, as well as understanding the ownership and control of captive entities, can help mitigate these risks.