Understanding Captive Insurance Programs

If you’re looking at cost-saving alternatives to traditional insurance programs that won’t undercut the level of protection you enjoy, you need to understand captive insurance companies and how they work. Captive insurance is more than just another alternative risk management plan. It’s a way to access insurance with all the advantages enjoyed by companies who can self-insure while being hit with far fewer restrictions and up-front costs than those companies typically incur. That means you can practically write your own policy and manage its costs within reason, but you also enjoy the advantages of being insured by an outside provider.

Your Business Owns Your Insurer

When you work with a captive insurance program, you basically start or buy into another company that exists solely as a specialty insurance provider. Sole parent captives can be expensive because of the need to maintain cash reserves in line with insurance industry standards, but often they are still less expensive than self-insurance without a captive program. They also don’t have to be sole parent solutions. You can save money by partnering with other businesses that have similar needs. There are program coordinators whose entire business is bringing those companies together and then managing the day to day operations of the captive. That makes owning your insurer fast, easy, and a lot cheaper than you probably expect it to be.