Corporations's over-reliance on captives would "come back to haunt them", delegates were warned yesterday.
Davis Arnold Cooper solicitor David Hertzell told a workshop that captives were being treated as a panacea for the current market and that undue demands were being placed on them.
Hertzell said: "Companies are asking captives to take risks, many of them long tail, which require underwriting, actuarial and other skills not normally found in captives. It is vital that captives, their owners and managers understand the risk being written."
Delegates were also warned against expecting captives to accept lower premiums than should properly be charged for the risk.
"If captives are misused there may eventually be a big hole in the accounts, and the parent company may have to pick up the tab," said Hertzell.
