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Oct 3, 2024 · Captive Insurance Company is an insurance company established by another (usually non-insurance) company or a group of companies to provide insurance coverage exclusively for the risks of its shareholder and/or of the affiliated companies of its shareholder. Captives are mainly used to optimize insurance cover, to reduce costs for insurance ...
- What Is A Captive Insurance Company?
- Understanding A Captive Insurance Company
- Tax Issues of Captive Insurance Companies
- Pros and Cons of Captive Insurance
- Examples of Captive Insurance Companies
- The Bottom Line
A captive insurance company is a wholly-owned subsidiary insurer formed to provide risk mitigation services for its parent companyor related entities. Companies form “captives” for various reasons, such as when: 1. The parent company cannot find a suitable outside firm to insure it against particular business risks 2. The premiumspaid to the captiv...
A captive insurance company is a form of corporate self-insurance. While there are financial benefits to creating a separate entity to provide insurance services, parent companies must consider the associated administrative and overhead costs, such as additional personnel and startup costs. There are also complex compliance issues to consider. As a...
The tax concept of a captive insurance company is relatively simple. The parent company pays insurance premiums to its captive insurance company and seeks to deduct these premiums in its home country, often a high-tax jurisdiction. Today, several U.S. states allow the formation of captive companies. Protection from tax assessmentis a sought-after b...
Captives can be an attractive option for companies looking for ways to manage and distribute risk, but there are advantages and disadvantages.
A well-known captive insurance company made headlines in the wake of the 2010 British Petroleum oil spill in the Gulf of Mexico. At that time, reports circulated that BP was self-insured by Guernsey, U.K.-based captive insurance company Jupiter Insurance, and that BP could receive as much as $700 million in coverage from losses. British Petroleum i...
Insurance is a significant expense for large companies. Captive insurance companies offer a way for companies to control costs, reap tax benefits, and cover risks that commercial insurance companies might be unable or unwilling to insure. While setting up a captive can be challenging, third-party captive professionals can help companies navigate th...
- Julia Kagan
The Office of Captive Insurance provides a structured regulatory process for the initial evaluation, licensing, reporting, analysis and examination of captive insurance companies domiciled in Ohio. Captive Insurance Resources
Captive insurance. Captive insurance is an alternative to self-insurance in which a parent group or groups create a licensed insurance company to provide coverage for itself. The main purpose of doing so is to avoid using traditional commercial insurance companies, which have volatile pricing and may not meet the specific needs of the company.
Ohio passed its captive insurance company act in June of 2014. As the most recent state to adopt captive legislation, Ohio hopes to capture a portion of the growing interest in captive insurance mechanisms. It stresses its business-friendly environment, reasonable licensing requirements, moderate premium taxes and fees, and responsive regulators.
Nov 20, 2019 · A captive insurance company operates in a similar way to a traditional property and casualty insurance company. A captive issues policies, processes claims, follows all applicable regulations, files a property and casualty insurance company income tax return, and has profits, if profitable, available to the insurance company owners.
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Jul 30, 2021 · An insurance subsidiary formed to provide risk mitigation services to its parent company. Basically, a parent company retains the cost of insurance coverage through the captive instead of paying premiums to a third-party insurer for commercial insurance. Said another way: A captive is an insurance company owned by the organization (or ...
