What is the purpose of an insurance captive?

An insurance captive is a type of insurance company in which an entity, such as a business, creates a special fund to provide its own insurance coverage. Captive insurance companies are an alternative to the traditional insurance market and are used to manage the risks associated with large, complex, or specialized operations. The purpose of an insurance captive is to allow the entity to retain control of its own risks. Captives provide a way for the business to self-insure and to manage its own underwriting activities, which can result in significant cost savings. Furthermore, captives can provide greater flexibility and customization when managing and structuring their unique insurance policies. In Idaho, insurance captives are regulated by the Idaho Department of Insurance. The Department ensures that captives meet the necessary capital and surplus requirements and maintains regular examinations of the captives’ financial statements and operations. Idaho businesses can benefit from using an insurance captive when the traditional insurance market does not provide coverage for certain risks. As well, businesses can supplement existing insurance coverage with the protection of an insurance captive. Ultimately, the purpose of an insurance captive is to provide an alternative form of protection, as well as cost savings, for businesses in Idaho.

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What is the purpose of an insurance captive?

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