Association captive insurance companies have been providing various types of insurance coverage, including general liability, worker’s compensation, and property and casualty to association members since the 1960’s. However, because the insurance market has undergone so many changes over the years, association captives started to melt into the background, and some had no choice but to disband due to lack of demand and public interest. Recently, however, association captiveshave made their way back into the spotlight, and there is now renewed interest in this unconventional way of obtaining insurance coverage.
How Does it Work?
An association captive insurance company is owned by an association, an association’s members, or both. The reason it is referred to as “captive” is simply because there are only a limited number of entities that are eligible for participation in such a program. Eligible captive insurance companies must select a captive domicile to have chief regulatory jurisdiction over them.
Benefits of an Association Captive
There are many different benefits that an association can experience if they form their members into a captive insurance company, including:
- The opportunity to increase membership in the association
- The ability to meet the affordable insurance coverage needs of its members
- The ability to provide its members with coverage that may not otherwise be obtained through the commercial insurance market
When regular insurance options are lacking, association captives are a great alternative for those who qualify.