Captive Insurance
|
|
Captive FAQs Should you consider an alternative to your present insurance situation? To help you evaluate this question, here are a few "captive FAQs" that will give you a brief "primer" on captives. What are the broad classifications of captives? Answer: 1. Group or association captives; and 2. Single parent captives The group or association captive is an insurance company formed to provide insurance to its group or association of owners. The owners consists of companies usually from a related business field. The second type of captive, a single parent captive, is an insurance company formed to provide insurance coverages to its single parent owner. How large does a company have to be in order to form a captive? Answer: This depends on the coverages and limits of insurance to be written through the captive. In general, to form a single parent captive, a company's annual insurance premium should be a minimum of $750,000. However, just about any size company can be part of an association captive. If my annual insurance premium is greater than $750,000 does that mean I should form a single parent captive and not be part of an association captive? Answer: Not necessarily. It depends on your reasons for forming a captive. Deductibility of premium for tax purposes may be better served by an association captive. There are plusses and minuses to both forms. An association captive may involve sharing of some financial information with other companies. In a single parent captive, you have much more control of its operations than under an association captive where you have to share control with other parties. However, an association captive allows you to spread the risk of losses among a larger group of risks. Why do companies form captives? Answer: The reasons for forming a captive are varied. Some of the common reasons cited include:
|
| ||||
Contact our webmaster if you experience website problems or broken links Developed for Milliman by InnerTek Software |
