A Business Alternative to Self-Insurance

Caitlin Morgan Insurance

A growing trend in insurance coverage is an investment into a captive insurance plan. According to Caitlin Morgan Insurance, this investment is an alternative to traditional provider coverage, in that the insurance company is a wholly-owned subsidiary insurance company owned by its insureds. It is considered a viable insurance program regulated by a state department of insurance, but those who are insured are limited. The captive can be formed from a single parent company or by multiple organizations in a collective group. Usually, those in group work in the same industry or share similar risks and exposures.

Apart from the protection from financial loss in the event of a claim or adverse incident, captive programs provide several benefits to those who are a part of the group. They include:

The ability to keep the underwriting profits distributed within the organization
More control over the underwriting and overall claims management process
More flexibility with underwriting
Increased access to the global reinsurance markets
A better tax benefit than more traditional self-insurance policies

Other benefits of the captive programs are associated with more special and unique risk insurance requirements. Because similar operations tend to form a captive, it can be easier to find adequate coverage for a niche business. The tax benefits and increased control of those who participate make captives an attractive option for insurance coverage.

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