What is the purpose of an insurance captive?

Insurance captives are special types of insurance entities created for the purpose of allowing companies and large organizations to self-insure themselves against liability losses and other risks. This type of entity is sometimes referred to as a “Risk Retention Group” or an “RRG.” In Indiana, insurance captives are formed under Indiana Code Sec. 27-7-3-81. The purpose of an insurance captive is to provide an alternative to traditional insurance companies. Without insurance captives, companies and organizations may be forced to pay high premiums to insurance companies in order to get the right type of coverage and protection. Captives allow them to legally secure a policy as if they were their own insurance company. Because captives are owned by their members, they have greater control over the premiums they will pay, and can manage their own insurance policies rather than relying on third-party insurers. This can mean lower premiums and more coverage for their members. Captives also allow companies to avoid certain fees and taxes that would typically be associated with traditional insurance companies. Overall, insurance captives are designed to provide companies and organizations with more control and greater flexibility to manage their own insurance policies and protect themselves from losses and risks associated with their operations.

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What is the purpose of an insurance captive?

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