INSUARNCE THAT WORK FOR YOU. NOT AGAINST

Captive insurance is a type of self-insurance where a parent group or groups create a licensed insurance company to provide coverage for themselves. This is different from traditional insurance because the captive is owned and controlled by the insureds, who are its primary beneficiaries. 

In traditional insurance, an external insurer bears the risk. In captive insurance, the parent company or group owns the insurer, meaning they bear their own risks. This can lead to reduced insurance costs and increased control over policies and claims. 

There are several types, including Single-Parent Captives (owned by one company), Group Captives (owned by a group of companies), and Microcaptives, which typically insure smaller risks. There are also Risk Retention Groups, Industry Captives, and others, each serving different needs. 

Organizations that have difficulty finding coverage in the traditional market, those with a good loss history, and businesses seeking more control over their insurance costs and risk management practices are prime candidates for captive insurance. 

Benefits include potential cost savings, customized policies tailored to specific needs, direct access to reinsurance markets, improved cash flow, and the ability to gain investment income from reserves. 

Yes, like any insurance model, there are risks. These include the potential for insufficient capitalization, mismanagement, regulatory changes, and the risk of claims exceeding forecasts. It's a model that requires careful planning and management. 

Captives are regulated by the jurisdictions in which they are established. Each jurisdiction has its own set of regulations and standards for captives, including capitalization requirements, reporting, and compliance. 

There can be tax advantages, such as the ability to deduct premiums and accumulate underwriting profits tax-free. However, tax benefits should not be the primary reason to form a captive, and regulations regarding tax treatment can be complex and variable.