What is the difference between captive and excess insurance?

Captive insurance and excess insurance are two different types of insurance regulation laws in Illinois. Captive insurance is when an organization sets up an insurance company within its corporate structure to financially cover its own risks and liabilities. This is something that companies may do when traditional insurance is too expensive or not available. Excess insurance covers the risks and liabilities that the captive insurer is not able to cover. This type of insurance is usually more costly, and is used when the risk is greater than the captive insurer can handle. Captive insurance is legal in Illinois and is an effective way for companies to protect themselves financially from risk without having to pay hefty premiums. This type of insurance is often used by larger organizations that need to insure their operations and assets. On the other hand, excess insurance is best used by smaller companies and organizations that may not be able to afford the high premiums associated with captive insurance. Excess insurance can also be tailored to the individual needs of the company or organization, giving more flexibility. Overall, captive insurance and excess insurance are two separate types of insurance regulation laws that offer different benefits in Illinois. Captive insurance is more cost effective for organizations that need to insure their operations and assets, while excess insurance gives smaller companies the opportunity to insure their risks without having to pay high premiums. Both types of insurance can protect companies from financial losses due to risk and help them stay successful.

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What is the difference between captive and excess insurance?

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