There are several types of captive insurance companies, and each one has a different use. Although some of them are improvements or alterations on other forms. The information presented by Caitlin Morgan Insurance Services establishes five different types of captive structures. They include:
- Single parent captive
- Rental captives
- Association/group captive
- Segregated protected cell
- Non-controlled foreign corporations
In spite of whatever structure you might have chosen, some things are shared traits between them all. One of these elements is the need for participation by the traditional insurer, or risk-sharing partner. These partners provide the means by which certification of limits and coverage can be established, loss mitigation and control, adjustments, risk management, underwriting, and more. One of the areas of provision is regulatory response and assistance, although this is generally an area that is often overlooked yet most needed.
Most Prevalent Captive Program
The single parent captive is the most commonly used captive structure. This where an insurance company is owned by one company and the company is usually the insured. It is not allowed to write insurance for other than its own risks, and its general purpose of the provide a risk transfer or financial assistance for a specific line of corporate coverage.
Choosing between a captive or commercial insurance policy is a choice that depends on your risks and the size of your business. However, you should never leave your business without coverage at all.