Benefits of a Captive Insurance Company

If you’re looking for improved risk management for your organization, then a captive insurance company may be a good option for you. A captive insurance group can be especially helpful if you can’t find an outside firm to insure you against particular business risks. You may also want to join a captive insurance group if you want your paid premiums to go towards tax savings, want more affordable insurance or need better coverage for your company’s risks.

Putting Your Own Capital at Risk

If you purchase captive insurance, you must be willing and able to invest your own resources as you’re working outside of the traditionally regulated commercial insurance marketplace. Unlike with a mutual insurance company, you have ownership of a captive insurance company. This means that you have control of the company and can also benefit from its profitability. While as a policyholder with a mutual insurance company, you are technically entitled to receive dividends if they make a profit, they generally accumulate their surplus rather than distribute it.

Benefits of Joining a Captive Insurance Company

You may choose to form a captive insurer if the products offered by other insurance companies don’t meet your risk financing needs. You may also choose to join a captive insurance group due to excessive pricing, coverage that’s not available in the traditional insurance market or limited capacity.

You might choose to utilize captive insurance for other reasons such as:

  • Lower costs: In a captive insurance group, the goal is to minimize certain costs such as acquisition costs, marketing expenses and overhead incurred by traditional insurance companies.
  • Increased profit potential: You can receive dividends directly related to loss performance, which is how you’re rewarded for effective risk management.
  • More time to run your business: By entrusting a capable company to take care of your insurance needs, you’ll have more time to focus on your business.



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