Most business owners unknowingly self insure a large amount of risk. Many of these are hidden or “below the surface” risks inherent in the operation of a business.
With a captive, self-insured risks can be converted into tax-deductible premiums that are paid to a captive. Any materialized risks can now be paid with pre-tax assets.
If insurance claims are as projected, the captive will retain substantial profits that can be distributed to its owners.


For many years, large corporations have used alternative risk transfer strategies to reduce insurance costs, improve risk management, and save taxes.  With the growth of the captive insurance industry, these benefits are now available to middle market companies, as well as groups and associations.

For sophisticated companies, managing and financing risk become important aspects of overall business strategy.  A captive insurance company is the premier risk management and risk financing tool.

We invite you to review this website and contact us to discuss how your organization can obtain the benefits of a captive insurance company or other alternative risk transfer vehicle.

Asset Protection

As with other insurance company structures, properly-formed captives have many asset protection benefits.

Captive Benefits

Succession Planning

Business owners with estate planning objectives will find that captives provide many beneficial solutions. It is important to consult with a qualified advisor to ensure that your captive meets necessary requirements.

Risk Management

A captive can act as the focal point for the risk management and risk financing activities of its affiliated businesses, and be viewed as a profitable part of the business enterprise. Conventional insurance typically provides little incentive to improve risk management, as there is no participation in the profitability of the insurance program. However, with a captive, the business will benefit from good claims experience. A captive provides strong incentives to improve risk management throughout an organization.

Cash Flow Benefits / Investment Income

Apart from pure underwriting profit, captives earn investment income on the premiums received. Premiums are typically paid in advance while claims are paid out over time. The captive retains control over the investment portfolio consisting of premiums and retained profit.

Cost Reductions / Capture Underwriting Profit

Unavailability of Coverage

Where the commercial market is unable to provide coverage for certain risks (including warranty, pollution, or product liability), or where the price quoted is unreasonaable (such as medical malpractice or construction defect), a business can insure such risks through a captive. If desired, the captive can obtain reinsurance for any large potential claims.

Underwriting Stability 

A captive insurance company is less vulnerable to the cyclical nature of hard and soft markets that affect the conventional insurance market. Thus, a captive can aid a business that requires accurate financial projections.

Typically 35% - 50% of the premium paid to a commercial insurer goes to overhead and profit. Instead, pay insurance premiums to a captive and retain the underwriting profit.


Insurance companies follow special rules with respect to taxes. Significant tax benefits may be available by utilizing a captive. Tax benefits alone, however, should not be the reason behind establishing a captive insurance company.



A captive may reduce the cost of workers’ compensation, general liability, medical malpractice, auto liability, property, or other conventional insurance. There are several methods available. One method, shown below, is to use the captive to retain the low severity risks, and purchase insurance from a large carrier only for catastrophic risks.

Under this arrangement, the insured business takes a large deductible. The captive then issues a policy directly to the business for the deductible (“or retention”) layer. The business then funds this retention layer with insurance premiums, and realizes both the insurance cost and tax benefit associated with financing risk through the captive.





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