About

• Essentially, formalized self-insurance.
• A captive is an insurance company wholly owned and controlled by its parent company, association or group, and organized to insure the risks of its parent company, association or group members.
• Captives represent an alternative to the traditional market with the benefits of true insurance.

Companies with:

• Financial stability
• Good spread of risk with predictable losses
• Good loss history
• Good risk management practices
• The ability to finance its own exposure
• Long-term commitment from senior management
• Unusual or hard-to-place risks
• Strong business partners
• Primary purpose of captive is other than the tax benefits

• Pure/Single Parent Captive
• Association/Group/Industrial Insured Captive
• Sponsored (cell) Captive
• Special Purpose Financial Captive
• Branch Captive
• Risk Retention Group

The first step to launching a captive program is to conduct a Feasibility Study, which should include:

• Cost/benefit analysis;
• Actuarial analysis;
• Financial projections;
• Tax analysis;
• Formulation of a preliminary business plan, including:
  • Business case for a captive;
  • Coverage lines, limits, rules, rates and policy types; and
  • An analysis of the proposed legal structure for the captive.
• Review of current insurance program;
• Analysis of reinsurance program; and
• Review of historical loss data.

• Strong state commitment to captive market.
• Knowledgeable service sector
• Convenient location.
• State-of-the-art captive law.
• Strong industry trade group.

• A desire to retain control over company assets.
• To formalize risk retention financing.
• To improve coverage of risks.
• To reduce the costs of financing loss.
• To create a new profit center.