Alternative risk

Risk & Insurance, Sept 1, 2004 by J.P. Schmidt

Dear Editor:

I am a big fan of your Alternative Risk column. I read the May 2004 edition of Risk & Insurance and was surprised that the State of Hawaii was not included in any of your references or comments.

Your reference to Nevada as the western-most domicile in the United States is only true based on the irrelevant limitation of "from coast to coast." Hawaii is the largest domicile in the west.

In the early '90s, Brian Hall, of Johnson & Higgins, and Andrew Carr, of Marsh, recognized the potential of Hawaii and established full service captive operations in Hawaii.

Secondly, your statement, "The construction industry, particularly on the West Coast, has been a powerful adopter of the RRG" absolutely begs (though in a dignified and respectable manner) for a mention of Hawaii, where we have 33 captives from the construction/real estate industry.

In addition, we recently helped two of the biggest tract home builders in the United States set up captives to achieve their risk management goals. Hawaii is seen as the premiere captive domicile for companies in the western United States and around the Pacific Rim, in particular in Japan.

Hawaii is the second largest domicile in the United States, with approximately 130 currently licensed captives that had just over $2.3 billion in assets and wrote approximately $1.4 billion in premiums in 2003. Unlike other U.S. captive domiciles, Hawaii is the home to several captives that owned by non-U.S. taxpayers from the Asia-Pacific region and insure non-U.S. risks.

The hardening insurance market in the western United States combined with the increasing sophistication of insurance consumers in Japan and other emerging Asian countries is expected to continue over the next decade.

J. P. SCHMIDT

Hawaii Insurance

Commissioner

Honolulu, Hawaii