Volkswagen’s 23-year-old Dublin captive continues to play an important role in the group’s risk financing strategy, according to Tibor Boettcher, executive director and CEO of Volkswagen Insurance Company DAC (VICO).
Boettcher was speaking on episode 111 of the Global Captive Podcast as he discussed the history of VICO and the German auto giant’s approach to captive insurance, and the role of the in house broker.
VICO was established in 1991 at a time when Volkswagen had recently made several high-profile acquisitions, such as Škoda in the Czech Republic and SEAT in Spain, as well as ramping up its joint ventures in China.
“Today I can say the captive is pretty large,” said Boettcher, who took on the captive role in January 2023.
“We currently underwrite seven lines of business. We take care of the major lines of business for the Volkswagen group, especially the marine cargo business and the property business.
“We have a team of nine people here in Dublin and we have four colleagues working out of Germany for the captive.”
Volkswagen largely self-manages VICO, but also utilises external service providers in Dublin.
The multinational operates an in-house broker, which takes care of insurance purchasing for the group worldwide.
“They decide in the end which insurance cover and which insurance company is going to participate in the various lines of business and in the various layers of the insurance protection,” Boettcher explained.
“We, as Volkswagen Insurance Company, are one of the insurance companies on the panel. In general, we, we take care of around 60% of the overall Volkswagen insurance cover and the remaining roughly 40%, is placed with other insurance companies.”
When it comes to claims, the in-house broker remains the contact for the local subsidiaries and various Volkswagen brands and business. The captive, put simply, is just the capacity provider.
“We deal with claims together with the broker,” Boettcher added. “In the end, the brands get an insurance product which is tailored to their needs, and which is then a combination of Volkswagen Insurance Company, so a captive product, with additional coverage or additional capacity from external insurance providers.”
From 2017 until 2023, the group owned a second captive in Ireland – Volkswagen Reinsurance Company – which was utilised to support a tailored health insurance coverage of expatriate workers.
The decision, however, was taken to close that vehicle down and make use of the commercial market for that particular coverage.
“We figured out as a group that external specialised health insurance companies might be the better option to take care of the expatriate health cover, instead of an in-house captive,” Boettcher said.
“There is one large health insurance company, who has an international footprint and which is in quality perspective, service perspective, and in the end as well from pricing perspective, the better choice for the group instead of having a second captive here in Dublin.”
Listen to the full interview with Tibor Boettcher on Volkswagen’s captive strategy on the Global Captive Podcast here, or on any podcast platform. Just search for ‘Global Captive Podcast’.