How a Captive Insurance Company Can Help You with Planning and Risk Management
There are numerous different reasons to consider using a captive insurance company and it is quite similar to a commercial insurance company in that your captive insurance company sets premium rates associated with the risks it chooses to underwrite, puts together policies for their risks insured, pays out claims, collects premiums and is licensed as an insurance company.
The major difference between a commercial insurance company and a captive insurance company is that a captive doesn’t have the ability to sell insurance to the general public. Instead, it only underwrites risks of the owner organization or related businesses and entities. One of the benefits of working with a captive insurance company that you create is that the rules and regulations associated with captive insurance are typically less overwhelming than regulations dealing with commercial insurance carriers.
One of the major reasons that someone considers setting up their own captive is because they have risks that cannot be covered in the current marketplace. This is usually a starting point, but it’s important to remember that it’s not the only thing that a captive insurance company can help you with. Speaking to an attorney familiar with this market can help you identify exactly how to use this planning opportunity.