Is Captive Insurance Right for Your Organization?
Captive insurance is a way for organizations to take more control over their insurance costs and coverage. It’s used by large corporations, non-profits, medium-sized businesses, and groups that share similar risks. It’s a way to manage the total cost of risk. A captive is a separate, licensed insurance company created to insure the risks of its owners, acting as a formal way to self-insure. .
Why Do Organizations Use Captives?
Organizations turn to captive insurance when traditional insurance options don’t fully meet their needs. This can happen when coverage is too expensive, too limited or doesn’t offer enough capacity. Captives offer several key benefits, including:
- Customized coverage: Tailor policies to cover specific risks or fill gaps left by standard insurance.
- Access to global reinsurance: Expand coverage capacity by connecting with international reinsurance markets.
- Financial advantages: Earn investment income on reserves and retain underwriting profits.
- Better claims management: Gain greater control over claims to help improve long-term results.
How to Get Started
Captive insurance companies have the potential to be effective and efficient tools in many organizations’ risk management strategies. Every business has unique risk profiles, capital structure and access to commercial risk transfer. Captives are a complex form of alternative risk management, and a thorough evaluation is essential to determine if a captive is a good fit.
At NFP, we start with an efficient pre-feasibility assessment to see if a more detailed study is worthwhile. If the initial results show potential, our team can conduct a comprehensive feasibility study to explore the benefits and costs in depth.
Interested in learning if captive insurance could work for your organization? Contact one of our experts to get started.
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