Captive Insurance: An Insurance You Can Control

Captive Insurance Company Benefits | Chamberlin Financial Inc.

Insurance comes in different kinds such as life insurance, health insurance, pet insurance and many more. But for business minded people ensuring their business would be their best interest when it comes to insurance. You can never tell when a business would bloom or go bankrupt, tonight might be a great one but tomorrow might not be, so to secure their business they have it insured. That’s why captive insurance is made to support the plea of business owners. 

What Is Captive Insurance?

Captive insurance is an insurance built by the owner of the business, it simply means they have made an insurance company to secure their own business. The goal of this insurance is to protect themselves financially. 

What Is A Captive Insurance Policy?

Captive insurance also has their policies. The good thing about this is the domicile of the policy is patterned according to the need of the company. 

What Are The Advantages Of Captive Insurance?

  1. Increase cash flow

Unlike traditional insurances the cash flow of captive insurance  can be controlled and monitored easily by the owner. Since they are the ones handling their insurance they can control where the money goes and where the investments are going. With this set up it will be easier for them to increase cash flow since the owner is aware of the whereabouts of the money being invested. 

  1. Reduce Operating Cost

The only employee a captive insurance would likely hire to assist in running the insurance will be an insurance manager. By having an insurance manager the company will be able to know how to run an insurance company, apart from the manager, the same board of directors of the company can also be the ones who will work for the  insurance company. Which means there is no need for more man power therefore reducing the operating cost of the captive insurance built by the company.  

  1. Management Control 

By having your own insurance you can make your own ruling on the premiums as long as it is approved by the States then it will be possible for you to customize your policies and benefits according to the needs of your company. IN captive insurance everything is transparent since you are the ones who manage everything and you can see where the money goes. 

What Are The Disadvantages Of Captive Insurance?

  1. Mandatory Raising of Capital

Capital should be available at all times just in case there are claims that need to be paid. If capital is not enough company assets need to be withdrawn which could lead to future risk for everyone. 

  1. No Tax Benefits 

Tax advantages for captive insurance have been reduced or eliminated. That’s why there are no benefits for captive insurance. 

How Do Insurance Captives Work?

Instead of paying premiums to other insurance companies, the company owner and it’s members pay a premium to their captive insurance. The earnings of the captive insurance in their investment are higher compared with traditional insurance companies since they deal directly with the market. 

What is the Difference Between Captive Insurance Vs Self Insurance?

Self Captive insurance is actually one kind of self insurance. It is considered self insurance since the company itself is the owner of the captive insurance and the main goal is to insure his own business. 

What Are the Differences Between Traditional Insurance And Captive Insurance

In traditional insurance the insurance company is the one in control of the premium you invested which means that you have no control where your money goes, while in captive insurance you can manage the flow of your premiums and transparency is there.  Another difference would be on premium content, in traditional insurance premium packages are already made and you have to choose one. However, in captive insurance you can create a premium that contains the ones that are applicable for you and eliminate ones that are not.

Captive insurance can be ideal for companies who have good management , this means they can manage their captive insurance well too. Being able to control and manage  your own insurance is a big deal for business owners. They will know if adjustments or changes are  needed to grow their capital, and they will be able to control the cash flow.Captive insurance has many types and you can opt which one is suitable for your company.