Captive insurance is a form of self-insurance. It is designed to provide insurance to a non-insurance company. Traditionally, captive insurance has been used by large companies as a wholly owned subsidiary that provides insurance to the parent company. Like regular insurance, captive insurance can cover almost any risk. They are often used to cover unique risks and provide tax benefits to the parent company. Sounds great, right? It is. So, why isn’t every company taking advantage of this valuable tool?
Not every company can take advantage of captive insurance because there are some significant financial and operational hurdles that larger companies have resources to overcome but smaller companies can’t support. For those who do choose to start a captive insurance program, there are several types of captives they have to choose from. With so many different types of captives, companies can get more creative with how and when they use captive insurance.
Top Operational Implications
- Flexibility with claims handling
- High administrative burden
- Shifting regulatory complexity
The Financial and Operational Implications of Captive Insurance - Everything You Need to Know
A deep dive on the pros and cons of standing up a captive and the difference between a standard program versus a full insurance program.
- Setting goals
- Efficiently research
- Consulting the proper experts
- Deploy resources appropriately