Are captives legitimate insurance companies? What types of company have captives? What types of risk can captives insure? Is a captive right for your business?
What is a captive insurance business?
A captive insurance company (referred to simply as a 'captive' in this guide) is an insurance company that is set up and wholly owned by a non-insurance company to act as a direct insurer or reinsurer for the parent company and its subsidiaries.
How are captive insurance company funded?
Premiums are the main source of income for a captive. At the onset, it may be more desirable to take a conservative view in premium funding to build sufficient capital such that the captive is able to pay claims and withstand unforeseen events.
What are the two major types of captive insurance companies?
Series LLCs and Cell Companies.
What is the point of captive insurance?
A captive insurance company represents an option for many corporations and groups that want to take financial control and manage risks by underwriting their own insurance rather than paying premiums to third-party insurers.