This Chapter will address a number of general issues that are of fundamental importance for the rest of this book. To tackle the questions concerning the proportionality of (re-)insurance captives’ regulation, it is necessary to have a strong understanding of what proportionality is and what it means for the concept to be incorporated into the law as a general legal principle. Therefore, in the following paragraphs, the principle of proportionality as a general concept will be explored. The lack of a clear legal definition of the principle of proportionality makes this a difficult task. The principle is applied to different fields of laws, by different authorities and at different levels; thus, the meaning given to proportionality may sometimes vary according to the analyzed case. Although it will prove hard to give a definition of the concept that will be satisfactory in all contexts and circumstances, it is possible to provide a standpoint which will serve the purpose of this book. Thus, the aim of this Chapter is to establish a clear position on the meaning of the principle of proportionality, its rationale, and its functions.