Companies encouraged to incorporate in-house insurance for continuity

KUALA LUMPUR, With an increase in global volatility, companies are encouraged to set up their own captive or in-house insurance companies to ensure their continuity.

Labuan Financial Services Authority director-general Danial Mah Abdullah said risk management is a form of self-insurance on the rise due to its overall cost effectiveness and customisable risk mitigating tool.

We see a rise in demand for captive insurance across the region, including Malaysia and it is expected to increase as risk management function advances and the corporate landscape evolves, he told a press conference today.

He added that as Labuan IBFC is the only one in the world that offers Shariah compliant-alternatives via takaful captive, it could gain more traction from countries in Asia.

In terms of gross written premiums, Labuan captive insurance business increased by 12.8 per cent to US$288 million in June this year compared with US$255 million in the same period last year, he said.

Danial said that most of the premiums were Asian originated, particularly from Indonesia and Japan, which is attributed to the increase in awareness about benefits of captives.

This has heightened the interest from multinational companies and medium-sized companies looking for more flexibility in managing their risks and understanding the use of special underwriting vehicles for their risk management solutions, he said.

Source: BERNAMA (News Agency)