News & Insights

What is a Captive Insurer?

August 4, 2022

A Captive is an insurance company that is owned and controlled by those it insures.

In addition to insuring the risk of its owners, those insured by the captive benefit from the captive insurer’s underwriting profits. The premiums that an organization would have paid to an insurer are paid to the captive instead. A captive is a great option for organizations seeking greater financial control and the ability to manage their own risks. The advantages are many. For one, because captives are made up of groups with similar operating procedures and missions, the coverage is tailored to meet their specific needs.

The economy of scale works in a captive’s favor. For example, if six organizations requiring a specific type of coverage seek to obtain that coverage as one entity, they will have greater negotiating leverage in the marketplace than they would if each acted on its own.