One of the biggest challenges facing businesses today is risk management. A tool that risk managers need to consider is a captive insurance company.The benefit of a captive insurance is that it allows a company to manage risk itself rather than depend on a commercial carrier. Standard risk management policies such as product and property liability coverage may not cover hidden risks such as loss of a key customer, supplier or data; theft or forgery by an employee; or breach of data, among others.
Once formed, the captive insurance company functions the same as a traditional insurance carrier, issuing a policy and receiving premium payments from its parent company.
What is a captive insurancecompany? A captive insurance company is a subsidiary company created to serve as an insurance carrier for the parent company. In essence, it is a way for the parent company to become self-insured.
What are the benefits of creating a captive insurance company?