In the 1960's, Frederic Reiss (1924-1993), a property engineer who became an insurance broker in Youngstown, Ohio, coined the term "captive insurer" and became the first person to invent the modern captive and to popularize the insurance captive movement. He ensured that the "captive" concept became an established practice in the industry, and in so doing, he also put Bermuda, the center for captive domiciles, on the map as the major international financial center it is today.
Starting in 1958, he developed a firm called American Risk Management, and he toured the world to seek an ideal offshore jurisdiction to allow his ideas on captives to flourish. In 1962 he founded International Risk Management Ltd. in Bermuda and in 1972 he formed the "captive of captives" facility known as Hopewell International. This was the first established captive management organization. Between 1970-1976, his firm was dominant in the Bermuda captive insurance scene and was considered well ahead of its time.
The advantages of captives are: sharing underwriting profits normally retained by conventional insurers; having options to self insure high frequency risks; a means to insure low frequency by high severity risk where coverage would be unobtainable; and providing direct access to reinsurance.
He received a scholarship to Harvard University at age 16 in 1941, where he became an engineering major. He was in the U.S.Navy inWWII and earned two purple hearts for service.