Captive insurance companies can offer parent companies an alternative way to manage key risks and a variety of premium and income tax benefits, panelists said during a recent webcast hosted by Lockton’s Alternative Risk Solutions Practice.
Captive insurers —distinct entities formed by parent companies or groups to formalize and finance self-insurance — can be structured to meet the individual needs of their owners and affiliates. As insurance companies, captives are subject to regulatory oversight, but typically have less stringent requirements than commercial insurers.
Parent organizations can write several lines of coverage through their captive. This can include auto liability, medical stop-loss and property, to name a few. Coverages that are required by statute, such as workers’ compensation, will typically have their deductibles insured by captives.
Managing a captive insurer requires a significant capital investment, which may thus make them unattractive to some organizations. Many organizations, however, can find that captives offer an efficient way to finance important risks for which traditional insurance market solutions are insufficient, with guidance from the right advisors, including experienced and knowledgeable captive managers.
Watch a replay of the webcast below, and contact Lockton for more information.