Captives are defined as independently owned and operated insurance companies that provide insurance to, and are controlled by, their owners. In simple terms, a captive insurance company insures (or reinsures) its owner’s specific risks. It generally reduces the cost of insurance and can return underwriting profits and investment returns in the form of dividends. Owners of captive insurance companies can control their insurance destiny and are no longer subject to the unpredictability of conventional insurance.
Most captives are licensed in offshore domiciles to take advantage of the more business-focused, yet still very effective, regulatory environments, as well as flexibility in regards to coverage and capitalization.
Captive Advantages
• Stability of insurance costs
• Control of costs
• Ownership
• Improved cash flow
• Improved risk management culture
• Better availability of coverage, or coverage customization
• Asset protection,
• New profit center
• Estate planning
In short, to “Take control of their Insurance Destiny” and for this reason, more and more organizations are evaluating captive insurance.