Captive of the Week: Terminus Insurance, Inc.
First published July 2, 2020
Our captive this week is Terminus Insurance, Inc., a subsidiary of Swiss banking giant Credit Suisse. A 4 minute video describing how $1.7 billion of nuclear, biological, chemical and radiological terrorism risk moved from Credit Suisse onto the balance sheets of US small businesses, nonprofits, local governments and other commercial policyholders is available here:
In this series we sneak a peek into the secretive world of captive insurance companies as they quietly move billions of dollars in risk from the balance sheets of their corporate owners on to yours through the US Terrorism Risk Insurance Program.
Congress established the $100 billion Terrorism Risk Insurance Program after September 11 to make sure commercial policyholders could buy insurance policies without terrorism exclusions. It didn’t take long for multinational corporations to figure out they could set up their own personal insurance companies to directly tap into the program.
Today more than 500 captive insurance companies have cut deals with their parent corporations for hundreds of millions and even billions of dollars of government-backed terrorism insurance. These captives offer coverages, limits and pricing simply unavailable to anyone who can’t afford to hire the sophisticated lawyers, accountants and advisors necessary to incorporate and manage a personal insurance company. Ultimately, the risks these mega-corporates shift into the Terrorism Risk Insurance Program land on the balance sheets of America’s small businesses, churches, school districts and other commercial policyholders.
Its time for Congress to give US Treasury tools to properly manage the Terrorism Risk Insurance Program and grant the American people the transparency to hold large corporations accountable. More urgently, Congress must add provisions that allow at least basic transparency and oversight of captives before turning them loose on the proposed $750 billion Pandemic Risk Insurance Program.
