What is a Captive

A captive insurance company (Captive) is designed to insure the business and related risks of a small (and usually related) group of insureds. Captives can be formed either in the United States or in a foreign jurisdiction. Captives are typically formed by companies when business insurance for a certain commercial risk cannot be obtained through traditional insurance markets. Captives can also be beneficial in planning for estate and business succession, asset protection, and income taxes.

Examples of industries that use Captives are:

  • Manufacturers
  • Automobile dealerships
  • Transportation
  • Oilfield services
  • Construction
  • Medical and dental

Examples of coverages that a Captive may insure are:

  • Cyber risk
  • Regulatory changes
  • Tax audit legal expense reimbursement
  • Employment practices
  • Crime/Employee dishonesty
  • Deductible reimbursement
  • Franchise legal defense costs
  • Liability for nuisance/frivolous lawsuits
  • Product rework
  • Reputation risk
  • Subcontractor default
  • Transportation damages