Captive benefits
Risk Management
Captive insurance companies may provide their owners with the following general risk management benefits:
- Access to insurance products not readily available from standard insurance brokers;
- Ability to custom-tailor insurance policies for a specific business or industry;
- Stability of premium pricing and a vehicle for financing selected risks;
- Assurance that certain coverages will be available and will not be cancelled;
- Control over underwriting, claims administration, and other operational decisions of the insurance company;
- Enhanced loss prevention through increased incentive to reduce claims;
- Opportunity to recoup underwriting profit.
Wealth Management
Captive insurance companies may provide their owners with the following general wealth management benefits:
- Creation of an additional profit center;
- Favorable tax treatment under section 831(b) or section 501(c)(15) of the U.S. Tax Code;
- Wealth transfer when the captive incorporated in a comprehensive estate plan;
- Asset protection and removal of wealth from the reach of creditors;
- Wealth accumulation as the captive invests its reserves and surplus.