Captive Structures

Single-Parent Captives
A “single-parent” captive is owned by the beneficial owner(s) of the business/operations which are being insured by the Captive company. These structures work for closely-held operations. It is also a structure required by the Health and Human Services Commission for a “limited purpose company” that acts as a self-insurer for health care providers.


Group Captive
A group captive is owned by unrelated parties of homogeneous or “like” businesses. The important piece of a group captive is that the owners not only have similar types of businesses and similar risks, but also that the owners have similar appetites for risk. This type of exposure generally requires an “on shore”-domiciled company to act as a “front.” The fronting company would issue the policies on behalf of the captive and charge a fee for their services.

A group captive can be established directly as a captive. It could also be established through a management company which would, in turn, own the captive.


Association Captive
An association captive is very similar to a group captive. The difference is the captive would be sponsored and owned by the Association and/or its members. The association captive usually requires a fronting carrier to maintain “arms length” underwriting and to maintain uniformity in the insurance services provided.


Reinsurance Captive
Many times, business people consider using their assets to re-insure a primary carrier. In this instance, the primary carrier would provide all the services required to issue insurance coverage and adjust claims, but the reinsurance captive would participate at some level of the risk. The owners of the reinsurance captive would set aside the amount of funds to cover their level of participation and the primary company would pay a premium (ceding commission) to the reinsurer for taking the risk.


Other Uses
There are times in the operations of a business where risk is inherent, but there is not commercial insurance available. Captives can be used for a multitude of exposures that are unusual or exceptional in nature.