Branch captives are gaining interest as captives domiciled outside of the US seek to provide certain coverages, including employee benefits and terrorism insurance, for their owners’ US-based operations, according to JLT Towner.
Tom Stokes, managing principal and US consulting practice leader at JLT Towner, has authored a paper that looks at the increasing interest in, and benefits of, branch captives, particularly offshore entities.
The paper suggested that in many instances captives may face a requirement to use a domestic entity, and a branch captive is one alternative.
Stokes stated: “Offshore pure captives might form onshore branches when US regulations require that the insurance company writing the coverage be admitted to do business in a US domicile.”
He added: “Branch captives are an economical alternative versus establishing a pure US captive or redomiciling from an offshore domicile.”
In the paper, Stokes cited Employee Retirement Income Security Act benefits and terrorism insurance as examples of an organisation’s need to have a US captive presence. Increasingly, branch captives are also including a variety of traditional and voluntary employee benefits.
