Captive Insurance Company

Council of the City of Gold Coast (Council) operates a wholly owned captive insurance company (subsidiary) which was established for the cost-effective financing of selected Council risks.


By 2002, insurance premiums and claims were costing the City millions of dollars each year, and some types of insurance cover could not be purchased. In 2003, Council investigated options to achieve more cost-effective insurance cover into the future.

This investigation included a feasibility study into the creation of a 'captive' insurance company.

A captive insurance company is a wholly owned insurance subsidiary of an organisation. It is not a new or unique model. In fact, as at 2017 there are around 6,647 captive insurance worldwide. Such companies allow direct access to the reinsurance market worldwide with the ability to purchase an extended and tailored range of insurance types, negotiate lower premiums and establish flexible payment options.

Most insurance for households or organisations is provided by 'retail' insurers (e.g. Allianz Insurance, QBE Insurance and so on).

Council's business case to establish a captive insurance company was independently reviewed by:

  • the Department of Local Government
  • Queensland Treasury
  • Queensland Audit Office
  • Council's Audit Advisory Board
  • Council's Internal Audit branch.

In late 2006, Council authorised the CEO to establish and operate a captive insurance company.

City of Gold Coast Insurance Company Limited

The City of Gold Coast Insurance Company Limited is Council's captive insurance company. It is licensed as an insurance company and regulated to ensure that it can continue to hold the licence.

In the first six years of operation, the company delivered millions of dollars in profit commissions. The following three years are expected to deliver additional financial results. This is largely due to:

  • the negotiation of insurance contracts with 'profit sharing' for a good claims record each year
  • improved cash flow and investment income, which is used to benefit Council, not an external 'retail' insurer
  • constant review, assessment and improvement of Council work practices and processes to ensure a reduction in risk wherever possible.

In addition to the direct financial benefits, the captive insurance model has also led to real improvements to Council's insurance cover. An example here is the inclusion of volunteers in the city's public liability coverage at no extra cost.

Reporting and management

Each year, Council is provided with an annual report on Council's insurances and the performance of the insurance model. The captive company is also subject to independent audit and regulation.

The CEO and City Solicitor are sometimes required to travel to the United Kingdom as Directors of Council's insurance company. They participate in an annual board meeting (most board meetings are held via telephone hook-up, however one meeting each year is held in the UK) and meet directly with insurers who are based in London.

The costs of the travel are disclosed to Council as part of regular management reports, and publicly via Council's Annual Report. The costs of such travel are more than offset by the financial benefits of Council's insurance model, which have amounted to millions of dollars to date.