What are captive programs?

A “captive insurer” is generally defined as an insurance company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer’s underwriting profits.

What is a captive group?

A group captive is simply a variation on a captive insurance company, or an insurance company wholly owned by those it insures. With group captives, ownership is typically limited to the insureds themselves. The captive exists primarily to provide greater long-term cost stability than the traditional market allows.

What are captive services?

Captive centers are client-owned-and-operated service delivery centers, typically in a nondomestic, low-cost location, that provide service resources directly to their organization. The personnel in a captive facility are legal employees of the organization, not the vendor.

What is an 831b captive?

831(b) Captive — a captive that may be taxed under Internal Revenue Code § 831(b), which provides that a captive qualifying to be taxed as a U.S. insurance company may pay tax on investment income only in any year that its written premium is at or below the threshold for the applicable tax year, which in 2017 was set …

How many captives are there?

Over the past 30 years, there has been significant growth in the captive market. Today, there are over 7,000 captives globally compared to roughly 1,000 in 1980 according to AM Best Captive Center. Captives can be domiciled and licensed in a wide number of jurisdictions, both in the U.S. and offshore.

Why is captive?

Benefits of a captive include the ability to tailor coverage for hard to insure or emerging risks, apply alternative strategies to deal with insurance market cycles, provide financial incentives for loss control, offer flexibility in managing risk, offer creative insurance solutions, allocate costs to business units.

What are the benefits of a captive insurance company?

Advantages of Captive Insurance

Coverage tailored to meet your needs.
Reduced operating costs.
Improved cash flow.
Increased coverage and capacity.
Investment income to fund losses.
Direct access to wholesale reinsurance markets.
Funding and underwriting flexibility.
Greater control over claims.

What are the reasons for creating a captive insurer?

Three reasons to create a captive

Flexibility for hard-to-insure and emerging risks. Captive insurance programmes are notable for their flexibility, especially within the emerging risks markets.
Potential tax benefits.
Increased control.

What is a captive client?

Definition of Captive Customer Buyer or user who is reluctant to substitute one product or vendor with another, because of the high cost (in terms of discomfort, effort, and/or money) involved in switching.

What is a micro captive?

By way of background, micro-captives are being used to insure against business risks. The captive insurance company is owned by the insured or a related party. The insured claims deductions for premiums paid to the captive insurance company.