Certainly! Captive insurance offers several advantages for corporations, groups, and individuals. Let’s explore them:
- Centralized Cost Control:
- Captive insurance keeps costs centralized.
- It allows corporations, groups, and individuals to manage risks by underwriting their own insurance.
- This reduces the number of premiums sent out to third-party insurers, providing more overall control over the insurance experience.
- Achieving Underwriting Profit:
- A captive insurance structure is like a “single parent.”
- Think of underwriting profit as less of a loss compared to obtaining a similar product from an external insurer.
- It’s akin to streaming your own movies for $3 per month instead of paying $10 for a similar service elsewhere.
- Captive insurance provides an opportunity to achieve this underwriting profit.
- Access to Reinsurance Market:
- While access to reinsurance has increased since the 1990s, there’s still an advantage.
- The parent company, group, or individual can purchase excess insurance placed into the captive.
- The captive can then purchase reinsurance when needed.
- Investment Income Vehicle:
- Captive insurance is wholly owned, allowing policyholders to control how loss funds and investment income are managed.
- Some cell captives even offer a guaranteed rate of return to policyholders.
- Diversification is possible through a range of return rates.
- High Levels of Flexibility:
- Although this benefit is usually reserved for non-fronted captive insurance, it applies to the industry as a whole.
- Flexibility allows tailored solutions to meet specific needs
