Captive Insurance - Worth a Look


As seen in the November issue of Goering Center for Family and Private Business E-Newsletter.

In today’s challenging economy and uncertain tax climate, a captive insurance company can offer multiple benefits. While a captive insurance arrangement is not a good fit for every, or even most businesses, for those businesses with a certain risk profile and the available cash flow, forming a captive insurance company can help to minimize insurance costs, control risks, improve cash flow and even serve as a wealth accumulation tool.

A captive insurance company insures the risks of its owner, affiliated business or group of companies. It issues policies, collects premiums and pays claims no different than any other insurance company. A captive is unique in that it typically provides insurance only for its parent or other associated entity. Captive insurance is not self-insurance. When someone self-insures, funds are set aside for a future event, but when a captive is used premiums are paid to a separate entity and a policy is issued. It is also important to note that captives are not a replacement for traditional insurance coverage. Captives generally act as a supplement to a commercial insurer, as they rarely underwrite all the risks of their parents. Certain types of risk are generally not carried by traditional insurers, but may be placed with a captive.

Please see full article below for more information.

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Published In: Business Organization Updates, Insurance Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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