Understanding Captives

Overview of Captives

A captive is an insurance company that insures the risks of its owner, affiliated businesses, or a group of companies. A Single Parent Captive is owned and controlled by one company and insures that company and/or its subsidiaries while a Group Captive is an insurance company owned and controlled by two or more non-affiliated organizations insured by the captive.

Advantages of Forming a Captive:

  • Reduced dependence on commercial insurance markets
  • Retain underwriting profit and investment income
  • Reduce risk management costs
  • Stabilize commercial insurance pricing
  • Increased availability of insurance coverages
  • Direct access to reinsurance markets
  • Increased control over services (claims handling, underwriting and loss control)
  • Regulatory and tax efficiencies