A captive is an insurance company that is typically owned (entirely or shared) by its parent company. Though it is your company, it is also a legitimate insurance company via insurance and reinsurance arrangements. As both the owner and insured, you control the underwriting, claims, and insurance company's investment decisions. Several different types of captives exist:
- Single parent or group: Your company maintains all operations (underwriting, claims, actuary, Etc).
- Group captive: Pooling resources with other like-minded companies to share the overhead expense.
- Rent-a-captive: Access to captive resources though usually with limited flexibility and ROI.
- Agency captive: Owned by insurance agencies, generally for large blocks of business or specialty risk, while agents retain all benefits.
