November 19, 2015

In the process of putting together a risk management plan, your attorney or other advisor might suggest using a captive insurance company for your business. Knowing what this is and how it can benefit you is a good place to start if you’re not familiar with this concept. 

A captive insurance company refers to a business formed by a business owner for the purpose of insuring affiliated and related business risks. The premiums received by the company are invested as opposed to lost and this is one of the biggest benefits of using a captive insurance company.

Captives also give the business an opportunity to insure against risks that would be uninsurable on the general market. These risks may be too expensive or unable to be covered at all with traditional insurance. This also provides access to the reinsurance market. The owner is more easily able to determine retention levels and structure a more flexible program in-house when using a captive insurance company.

Although there are plenty of benefits for using a captive insurance company, it must done properly if the business owner wants to maximize these advantages. Speak directly with an attorney to learn more about how these should be structured and managed in order to truly protect your risks and provide you with maximum benefits.