What Is Captive Insurance?

What is Captive Insurance? Captive Insurance is a form of self-insurance where a company creates a licensed insurance entity to insure its own risks. Unlike traditional insurance, captives provide greater control over claims, underwriting, and risk management processes. Captive Insurance Solutions help reduce reliance on commercial insurance markets, offering stability against market fluctuations. Captives can be structured as single-parent captives, which are owned by one company, or as group captives, owned by multiple companies with similar risk profiles. Benefits include potential cost savings, access to reinsurance, and the ability to cover risks that might be uninsurable in the traditional market. They also allow for the accumulation of investment income on premiums and the return of underwriting profits to the captive owner(s). Establishing a captive involves regulatory compliance, loss funding, and an ongoing commitment to risk management.