| CODE | ISR5046 | ||||||
| TITLE | Captive (re)Insurance: Regulations, Risk Management and Alternative Risk Transfer | ||||||
| UM LEVEL | 05 - Postgraduate Modular Diploma or Degree Course | ||||||
| EQF/MQF LEVEL | 7 | ||||||
| ECTS CREDITS | 5 | ||||||
| DEPARTMENT | Insurance and Risk Management | ||||||
| DESCRIPTION | This study-unit provides a comprehensive and interdisciplinary exploration of the legal, regulatory, and managerial aspects of captive insurance. The study-unit covers the full lifecycle of captives, from licensing and governance to capital requirements, risk quantification, and compliance. It integrates technical, regulatory, and strategic perspectives, addressing the use of captives as instruments for risk retention, capital optimisation, and resilience within corporate structures. Special attention is devoted to the interaction between captives and reinsurance markets, alternative risk transfer (ART) tools such as insurance-linked securities and parametric solutions, and to emerging themes including digitalisation, ESG integration, and innovation in captive management. The programme concludes with a workshop and assessment module, allowing participants to design, defend, and evaluate a captive programme in a practical setting, bridging academic concepts and real-world application. The areas covered within this study-unit are: - Introduction to Captives and Regulatory Context - Licensing, Governance, and Regulatory Requirements - Capital Requirements and Risk Quantification - Captive Operations and Technical Management - AML, Tax, and Economic Substance - Integrated Risk Management and the Role of Captives - Reinsurance, Fronting, and Alternative Risk Transfer - Insurance-Linked Securities and Parametric Solutions - ESG, Digitalisation and Innovation in Captives - Workshop and Final Assessment Study-Unit Aims: Learning Outcomes: 1. Knowledge & Understanding: By the end of the study-unit the student will be able to: - Explain the legal and regulatory framework governing captives under EU law and Solvency II, including proportionality and cell company structures. - Explain the operational, financial, and governance features of different captive models (single-parent, group, rent-a-captive, PCCs, ICCs). - Evaluate capital, solvency, and compliance requirements applicable to captives. - Analayse how captives interact with reinsurance markets, ART instruments, and ESG/sustainability frameworks. 2. Skills: By the end of the study-unit the student will be able to: - Communicate complex regulatory and financial concepts clearly and effectively to multidisciplinary audiences. - Engage in collaborative work through team-based design and peer evaluation exercises. - Apply critical thinking and reflective judgment to real-world scenarios involving captives and risk-financing decisions. - Use data and regulatory documentation (e.g., RSR, SFCR, ORSA) to inform strategic decisions. Main Text/s and any supplementary readings: RSO II Reply: Google form generated for creation of reading list in the new study unit. Below please find the APA 7 reference list: - Marano, P., & Siri, M. (Eds.). (2017). Insurance Regulation in the European Union: Solvency II and Beyond. Cham: Palgrave Macmillan. ISBN 978-3319612157 / 978-3319612164. Cummins, J. D., & Weiss, M. A. (2009). Convergence of insurance and financial markets: - Hybrid and securitized risk-transfer solutions. Journal of Risk and Insurance, 76(3), 493–545. - European Insurance and Occupational Pensions Authority. (2019). Solvency II Supervisory Handbook. EIOPA Publications Office. - Christiansen, M. C., & Niemeyer, A. (2014). Fundamental definition of the solvency capital requirement in Solvency II. ASTIN Bulletin: The Journal of the IAA, 44(3), 501–533. https://doi.org/10.1017/asb.2014.10 - Brooks, D., Care, R. J., Chaplin, M. B., Kaufman, A. M., Morgan, K. A., Roberts, D. N., Skinner, J. M. E., Huntington-Thresher, D. J. K., Tuley, P. J., & Wong, D. L. (2009). Actuarial aspects of internal models for Solvency II. British Actuarial Journal, 15(2), 367–459. - Vaughan, T. M., & Vaughan, E. J. (2013). Fundamentals of risk and insurance (11th ed.). Wiley. - Hoyt, R. E., & Liebenberg, A. P. (2011). The value of enterprise risk management. Journal of Risk and Insurance, 78(4), 795–822. - Screpante, M. (2023). The OECD transfer pricing guidelines and value creation: Income allocation or anti-avoidance tool? Torrossa. - Ferwerda, J. (2009). The economics of crime and money laundering: Does anti–money laundering policy reduce crime? Review of Law & Economics, 5(2), 903–929. https://doi.org/10.2202/1555-5879.1421 - Lam, J. (2014). Enterprise risk management: From incentives to controls (2nd ed.). Wiley. (Online access: https://ebookcentral-proquest- com.ejournals.um.edu.mt/lib/ummt/reader.action?docID=1594547&c=RVBVQg&ppg=1) - Woods, M. (2009). A contingency theory perspective on the risk management control system within Birmingham City Council. Management Accounting Research, 20(1), 69–81. - Plantin, G. (2006). Does reinsurance reduce insurer risk? Journal of Financial Intermediation, 15(3), 362–383. https://doi.org/10.1016/j.jfi.2005.12.001 - Bayliss, C., Guidotti, R., Estrada-Moreno, A., Franco, G., & Juan, A. A. (2020). A biased- randomized algorithm for optimizing efficiency in parametric earthquake (re)insurance solutions. Computers & Operations Research, 123, Article 105033. https://doi.org/10.1016/j.cor.2020.105033 - Eling, M., & Lehmann, M. (2018). The impact of digitalization on the insurance value chain and the insurability of risks. The Geneva |
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| ADDITIONAL NOTES | Pre-requisite Qualifications: A Bachelor's degree or equivalent as recommended by the BOS and RPL | ||||||
| STUDY-UNIT TYPE | Lecture | ||||||
| METHOD OF ASSESSMENT |
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The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints. Units not attracting a sufficient number of registrations may be withdrawn without notice. It should be noted that all the information in the description above applies to study-units available during the academic year 2026/7. It may be subject to change in subsequent years. |
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