What are Captive Insurance Programs?

There are two larger segments of captives we are experienced in. The details of these programs are very intricate and the programs require a time investment to learn the details of how the captive functions, if your risk tolerance is right, and to calculate your potential savings.

Captive Insurance Programs

• What are some of the most common types of captives in the marketplace today?
• • • Group Captives
      • Homogenous
      • Heterogenous
    • Rental Captives
    • Single Parent Captives
    • 831(b) Captives

• Descriptions of each:

  • Group Captives – there are two types:
    • Homogenous
      • Businesses of the same industry class are grouped together to form a captive insurance company
      • Generally, these types of businesses have high risk exposures either on their worker’s compensation, general liability, or auto liability lines of coverage
      • Examples of industries with homogenous captives are:
        • Roofers
        • Long Haul Trucking Companies
        • Staffing Firms
    • Heterogenous
      • Businesses of different industry classes
      • Generally, these types of business have medium to low risk exposures on their worker’s compensation, general liability, and auto liability lines of coverage
      • Some of these captives still have acceptable and unacceptable classes of business which they will consider
  • Rental Captives
    • Often a step between a group captive and a single parent captive
    • Differs from the group captives in the way the risks are shared between members of the rental captive
    • Special consideration should be given to the actual calculations of reserves and the use of a tax professional is highly advised

• • Single Parent Captives
    • A single company forms its’ own insurance company
    • The company is the only insured of the insurance company
    • Typically companies looking to start a single parent captive are at or near the largest members of a group captive arrangement

• • 831(b) Captives
    • Pertains to the section of the IRS tax code where the IRS limits the amount of premium a captive can receive in a given year
    • Can insure risks which are either expensive, or impossible, to cover in the traditional insurance market
    • Allows for the company to set aside premium dollars each year, even if a claim for the insured risk doesn’t necessarily happen every single year

For more information on captive insurance programs and to see if one is right for you, fill out our contact form and our captive specialist, John Roark, will get in touch with you.