We have heard so much in the news
lately about businesses trying to stay afloat. A lot of business owners have
researched insurance options and many have decided that choosing from the top
captive insurance companies is a good idea.
Some people have never heard of captive insurance companies. Keep reading to find out how these companies work.

Top
Captive Insurance Companies
If you are like most people, you may
need a little captive insurance education. Some of us have not heard of this
type of insurance before.
Captive insurance companies provide risk mitigation services for a parent company or
group of related companies. It is a wholly-owned subsidiary of a larger firm.
In essence, it is self-insurance.
Captive insurance companies finance
losses in a structured form. They usually supplement commercial insurance
policies.
A business can form its own insurance
company to insure against risks. They offer custom-built insurance coverage.
How
It Benefits You
With captive insurance, you can get
tailored insurance coverage that meets specific needs. It may improve your
company's cash flow and give greater control over claims.
Captive insurance companies
supplement commercial insurance, so you have more coverage. This reduces worry
over claims risk.
This type of coverage may include
anything from legal expenses to cyber-attacks. It will offset business and
operational risk.
Business owners maintain control
over claims processes. This eliminates the chances of denials. Click here for more information on captive insurance benefits.
You also get tax benefits. These
companies are regulated and required to operate as genuine insurance companies.
You will keep all the earnings and keep the money in the captive to protect
against unexpected losses.
Forming
a Captive Insurance Company
The first step companies take in
forming this type of insurance company is to figure out what type of captive
structure you need. This will require some thought.
It may be a parent structure, which
owns the captive and insures the risks of the parent company. This is a
subsidiary of the company.
It could be a group or association
captive. This group shares all the risk and owns the captive.
Companies usually do a study next.
This will audit your risk management needs.
Most companies hire a captive
manager. This person will oversee all aspects of the captive, including
choosing a domicile, or territory that licenses the company.
The last thing that is done is
submitting the application. You will have to prove that you have the capital
needed for the captive.
Do
You Need One?
Many companies are tempted to form
captives. This is generally a good idea, but you need to prepare to be in the
insurance business. After all, captive insurance companies are bona fide
insurance companies.
Remember, you will expose your
capital to some risks. You may need collateral upfront so know what your
financial position is.
The top captive insurance companies serve a wide variety of business needs. If you're looking for a great supplement to traditional insurance, a captive will be a great fit for your company. Follow us for more insurance tips!
No comments:
Post a Comment