A renewed interest in the captive insurance structure could be spawning a recent surge in the number of insurance incorporations on the Island.

During the last quarter, Bermuda saw the pace of incorporations escalate - 25 during the three-month period ended June 30, 2002 compared to 19 in the same period a year ago - which an Island regulator said could be tied to increased interest in the captive concept.

Deputy director of insurance at the Bermuda Monetary Authority, Shelby Weldon, said the number of captive companies to form in Bermuda in the first six months of this year had already bypassed last year's numbers:

"The jurisdiction has seen renewed interest in the pure captive sector with incorporation of 18 (captives) this year - a 40 percent increase over the 13 (captives) incorporated in 2002," he said.

Captive companies - insurance entities set up to insure their owners - in Bermuda date back to the 1960s and were the original backbone of the Island's insurance sector. Today, captives remain an integral part of the Bermuda market with two-thirds of the Island's insurance companies falling into this category.

The captive concept, which is in essence self-insurance, can be a way for companies to manage the cost of risk at a lower rate than available from traditional insurers.

Of those companies to incorporate during the last quarter, ten were class one single parent captive companies, three were incorporated as class two or multi-parent captive companies and another ten as the larger class three insurers.

In addition, one long-term insurer was added to the books as well as one class four insurer - which carries the requirement of minimum capital and surplus of $100 million - incorporating on the Island.

In the second quarter of 2002 there were eight class one insurers, four class two companies, six class three and one class four incorporated on the Island.