What is captive insurance management?
What is captive insurance management?
A captive is a licensed insurance company fully owned and controlled by its insureds – a type of “self-insurance.” Instead of paying to use a commercial insurer’s money, the owner invests their own capital and resources, assuming a portion of the risk.
What is a 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 …
What is captive risk management?
A Captive Insurance Company (captive or CIC) is a property and casualty insurance company established to provide coverage primarily for a parent company. It can be a valuable risk management tool which allows businesses to more effectively manage corporate risks of all kinds.
What are the different types of captive insurance companies?
Types of Captives
- Single Parent: This type of captive insures the risks of related companies and is owned and controlled by the related company or its affiliates.
- Sponsored Captive:
- Group/Association Captive:
- Agency Captive:
What is a micro captive insurance?
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.
What is an 831b plan?
831(b) is a special insurance company election allowed under the US Internal Revenue Code. It essentially makes 831(b) qualifying captives exempt from income tax except its earnings on investment. Some captive promoters may be marketing 831(b) captives as income and estate planning tax shelters.
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.
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.
