ABSTRACT
Multinationals 31.7 The captive offers certain advantages to the multinational, including assisting it to obtain greater control of its risk financing on a global scale by gaining a far wider coverage of the insurance expenditure, whilst reducing it as described below. Another way in which the captive aids the insurance company is in centralising the worldwide risk-financing policy, as it can obtain business from all of the company’s various subsidiaries, enabling the profits from these various transactions all to accrue to the captive. This centralisation can be improved by developing global insurance policies, which has the added advantage of allowing many local technical difficulties to be effectively side-stepped, for example, local capacity problems, strict regulation of policy wordings and premium control.
