What is the purpose of an insurance captive?

An insurance captive is a type of insurance company created by a business to provide insurance to the business. In the state of New Jersey, an insurance captive is regulated by the State of New Jersey Department of Banking and Insurance. The purpose of an insurance captive is to allow the business to self-insure for certain risks. By creating and managing their own insurance captive, the business can potentially reduce their insurance costs and provide better coverage than what is available through a traditional insurance company. They can also take advantage of certain tax benefits. An insurance captive also allows the business to control the amount of risk they are exposed to. Most traditional insurance companies will only provide coverage up to certain limits and will often require additional coverage to be purchased for risks that are more difficult to insure. With an insurance captive, the business can customize their coverage levels to match their unique risks and business needs. Finally, with an insurance captive, the business can make more informed decisions about risk management and control their own destiny when it comes to insurance coverage. This greater control can lead to improved risk management practices and better overall protection for the business.

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What is the purpose of an insurance captive?

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