Cell Captive Agreement
Because each registered cell is a separate legal entity, a registered cell can enter into a transaction with another registered cell. This is in stark contradiction to the cells of a PCC. Although each cell has its own board of directors, the law requires that the identity of the ICC board be identical to the directors of each ICC cell. Similarly, the secretary of an ICC must also be the secretary of each of its cells. In 1997, Guernsey developed the Protected Cell Company (PCC) concept to provide a solution for companies that wanted to use the risk management solutions of traditional single mother insurance but did not want to create their own inveterate systems. A CCP is its own legal entity, which is a property it shares with a traditional insurance company. However, unlike a traditional insurance company, the structure of a CCP is subdivided into cores containing capital for the entire business and into individual cells that have the ability to be capitalized individually and separately from the core or to use the core funds to meet their capitalization requirements. One of the main advantages of a PCC installation is that the assets of each cell are legally separated to ensure that a claim against one cell cannot be covered by the assets of another cell.  Today`s complex risk environment requires companies to constantly seek solutions that can support effective risk management. Large companies have long relyed on prisoners to support such risk management requirements. Now, even small and medium-sized businesses are trying to take advantage of the benefits that other risk management solutions can offer – but because of the resources needed for education and management, a self-employed captive may not be the first step for all businesses. The answer may be to set up a cell within a risky retirement mechanism, in which risk is held on a separate risk account and creditors of other companies, often with significantly lower capital requirements than an autonomous prisoner. Characteristics of companies that would benefit from the retention of risks in a cell include those looking for an alternative risk management solution without the costs or obligations of a self-employed prisoner, as well as those with a history of loss above the average in their sector.
If pricing in the traditional risk transfer market does not yet reflect improvements in a company`s loss control, a captive cell may be a less costly solution to manage that risk. In the end, each business will receive a higher premium than the fees and losses the company would pay if the risk remained in captivity in the cell.