What are group captive insurance companies?
Group captive insurance companies are owned by a collection of companies. The group captive structure allows small- and mid-sized companies to enjoy the advantages of captive insurance by pooling their resources and sharing risk with like-minded organizations. Group captives themselves come in a variety of forms.
What are the benefits of a captive insurance company?
The insured in a captive insurance company not only has ownership in and control of the company but also benefits from its profitability. A policyholder in a mutual insurance company is theoretically entitled to receive dividends if the company makes a profit.
Does a captive insurance company get a tax break?
If the parent company realizes a tax break from the creation of a captive insurance company will depend on the classification of insurance, the company transacts. In the United States, the Internal Revenue Service (IRS) requires risk distribution and risk shifting to be present for a transaction to fall into the category of "insurance.".