Captive insurance refers to the insurance products provided by an individual company, usually one that’s owned or controlled by the firm. Insurance companies can be categorized as captive if they’re wholly-owned subsidiaries of the same parent company or if they meet other criteria to be considered captive. Here are a few things to know about captive insurance.
Purpose
The main purpose of captive insurance is to provide coverage for its owners. The main goal of an insurance company is to grow and maximize its underlying profit. The company owners benefit from the underwriting profits. According to Bagla law firm, offshore asset protection removes an individual’s asset portfolio from the U.S.
Another way you can look at captive insurance is this: they are a group where each individual must pay premiums. That means captive insurers, if established as a separate entity, will often take advantage of economies of scale or scope. In the case of corporate captives, the firm in question will typically maintain its separate legal existence as well as its accounting systems and investor relations department. The industry typically refers to these elements as a good captive.
Who Uses Captive Insurance?
Captive insurance is ideal for people who risk their money by investing in insurance companies. It’s also used by individuals working outside the commercial insurance marketplace to ensure their assets are protected. Captive insurance is a good option for people who do not want to face the regulations applicable to traditional insurance companies. Such regulations limit what can be insured, pricing, and limited capacities. According to Southwest Ledger news, captive insurance has flexible risk management programs, making them more ideal than traditional insurance covers. The market for captive insurance has grown a lot, indicating how reliable it is in providing various policies.
Risks Covered by Captive Insurance
Captive insurance products can cover almost any kind of risk that you can think of. Still, they tend to be concentrated in the areas such as automotive insurance, worker’s compensation, commercial property and casualty coverage, and health insurance. Other, more unusual risks could exist as well.
Captive insurance financial services provide coverage through a “captive” backing, which means that the interest is backed by the captive’s assets and thus isn’t as vulnerable to financial fluctuations as conventional insurance. Many captive insurers are also CNAs, meaning they have in-house management and act as independent insurance companies.
Captive multi-state insurers offer coverage across multiple states with one company behind them. Call us today to find out more information about captive insurance.