Understanding Captive Insurance and The Benefits It Offers

Finding the right business insurance for your company can be confusing and time-consuming. Add to it the volatile prices that usually accompany commercial insurance policies once they’re active, it’s easy to see why some organizations choose to look for alternative solutions. Here’s what you should know about a captive insurance program and what makes it a great option for your company.

What is Captive Insurance?

Captive insurance is a form of self-insurance where an organization creates a licensed insurance company to provide coverage for itself. They’re required to follow the same regulations as traditional insurance companies and are ideal for larger organizations with cash on hand as they’re responsible for providing the funds for the captive.

A captive company can offer core coverages such as general liability, workers’ compensation, professional liability and auto liability. They can also offer more non-traditional coverages including pollution liability and equipment maintenance warranty.

What are the Benefits of Captive Insurance?

Here’s what you can gain from using captive insurance.

  • You have full ownership of the company and can control coverages to fit your exact needs.
  • Owners are incentivized to carefully manage risk as better performance leads to higher returns for them.
  • You don’t have to worry about fluctuations in premiums from year-to-year.

A captive insurance program is a great alternative for organizations who are having trouble finding the perfect insurance. It offers the same coverage options as traditional options with more control over its performance and without the premium hikes.