Captive insurance is when an insurance company is able to be run by the people who insure it, rather than the big insurance corporations. Being part of a captive insurance company comes with many benefits, some of them helping to keep risks and taxes low. They protect assets, protect claims, lower premiums, and help businesses take risks by insuring them.
Captive insurance should be used for businesses that want tax deductions, have $500,000 or more in profits, have risks that are uninsured, and want their assets protected. But becoming a captive insurance policy takes a lot of time and a lot of ability to prove that they can transfer risks in exchange for premium payment.
But if the captive insurance for a business succeeds, then they will spend less time needing to work with commercial insurance. With time, their surplus money grows, and they can expand their company to cover more risks. Plus, prices can be stabilized, where coverage can be priced based on what the insurers want. Unlike conventional insurance companies that can be a bit too broad in their price coverage, and that can harm individuals.
For insurers, there is more captive freedom as the government doesn’t step in to regulate every single move. Instead, the captive insurance can operate under its own authority, while the government regulations can still provide structure while also causing the captive to grow. It’s a lot more freedom for everyone involved.
With that freedom also comes the ability to customize the insurance programs to insure multiple types of risk and control the factors that give way to sudden losses. Being captive insurance takes a lot of work and a lot of time, but once you get approved then it will give more money, freedom, and control to the insureds. That’s worth a little elbow grease right?