ABSTRACT
An alternative to traditional insurance is available to those involved in the construction industry by captive insurance company 'captive' arrangements. There are two categories of captive: first, the wholly-owned subsidiary that only insures and manages all or part of the risks of its parent known as a 'pure' or 'classical' captive; and secondly, the captive that is owned by several unrelated shareholders, for example, sponsoring organisation, group or association, primarily for the benefit of its parent or sponsor 'partial' captive. Taxation incorporating captives offshore with a tax-sheltered environment can give rise to lower costs, and significant tax allowance, tax savings from claim reserve funds, and tax deductions. One common use of the captive is to provide cover for risks that have no cover in the conventional market. The principal locations of captives include various states in the USA, provinces in Canada, Luxembourg and several offshore locations including the Bahamas, Cayman Islands, Bermuda, Barbados, Guernsey, Dublin and the Isle of Man.
