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Blog - Captive Insurance 101

Blog

There are likely risks your company is currently self insuring. Some of these risks are obvious to you; for example, you may decide that for certain risks where you have a history of frequent, small claims, you’d rather pay the claims directly instead of relying on insurance coverage. However, because you want to make sure...
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The insurance your company is currently purchasing through the traditional market likely includes coverages such as general liability, property, workers’ compensation, product liability, directors’ and officers’ and auto. Many captive owners are perfectly comfortable with these coverages and wouldn’t consider moving them to a captive. However, there are times when the terms, conditions, or coverage...
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At this point hopefully you are thinking a captive sounds great, but are wondering exactly what kinds of coverage can be written and what are the limitations? First, it’s important to understand that there are certainly types of coverages that are better suited for a captive. These are identified in the table below: Low frequency/low...
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One of the most attractive advantages of a captive insurance company over traditional insurance is that the captive can underwrite almost any type of risk the captive owner desires. The important qualification is that it must be commercially reasonable—but it doesn’t have to be commercially available. In fact, this very advantage drives many to establish...
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Despite their advantages, it is important to point out that captives are not right for every organization. Unfortunately, this doesn’t keep promoters from convincing organizations to use captives in inadvisable ways. I am continually surprised at how many organizations are led to believe they can use a captive in ways that range from being wrong...
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There are many reasons an organization chooses to form a captive. The best way to fully understand the specific opportunities and benefits for your particular organization is to consult with a risk management advisor who has expertise in the captive, traditional, and the alternative risk transfer insurance markets. Such a professional would likely gather some...
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On Friday December 18th Congress passed the ‘Tax Extenders Bill’ as part of the “Protecting Americans from Tax Hikes (PATH) Act of 2015”. On page 176 were new rules affecting small captive insurance companies. The language is complicated, but in summary; The new rules will be effective 1/1/2017 The 831(b) limit will be increased from...
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To understand the potential benefits of forming a captive insurance company, it is helpful to first recognize that the decision to establish a captive is not a decision to abandon the commercial insurance market. Every company that operates a captive also carries various forms of commercial insurance. In a well-designed strategy, the two methods work...
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How integrated are captives in today’s market? Based on the existence of more than 7,000 operating captive insurance companies and more than three decades of mainstream market and regulatory acceptance, the captive insurance model can be considered, by nearly all measures, a well-accepted risk-management option in today’s market. This was certainly not always the case....
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Background The construction industry has seen steady growth over the past few years, and so have the insurance specialists that serve this market. Construction spending in late 2015reached a new seven-year high and climbed at the fastest rate since 2006. While business is solid, new laws and regulations have made CEO’s & CFO’s in the...
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Risk Management Advisors Inc.

444 W. Ocean Blvd, Suite 1250
Long Beach, CA 90802

New York Office:
RMA Insurance Services, Inc.
244 Fifth Avenue, Ste J248
New York, NY 10001
Phone: (562) 472-2846
Fax: (562) 435-7886