A captive, in insurance terms, is an insurance company that is completely owned by those it insures. Companies will join or form a captive with others in their industry to help write policies, set premiums and evaluate risks. Any underwriting profit or investment income from the captive is split between the companies, allowing you to cut costs and generate cash flow. You can even join a rent-a-captive to get many of the benefits without all the risks and starting costs.
So, what is rent a captive and how can your company benefit? The experts at www.caitlin-morgan.com define this type of captive as an arrangement wherein a capital base is accessed by a third-party company that wants to form a captive but does not have the time or money required to incorporate a distinct entity. This can be a good way to develop the experience, contacts, and capital needed to start your own captive with less time and cost upfront.
Taking advantage of the benefits offered by a rent-a-captive arrangement can give your company the chance to reduce overall insurance costs while getting customizable coverage because you will have the chance to write policies and evaluate risks. You can also receive investment income and underwriting profits from these groups without having to spend the time and money required to incorporate your own separate captive insurance entity.