How Does Captive Insurance Work?

Captive insurance companies have been in operation for decades. These companies are usually made up of groups of businesses who wish to insure themselves and profit from underwriting expenses while also receiving tax advantages. They function similarly to traditional insurance groups in that they provide policies and deal with the claims that arise for those they insure. What is different from most standard insurance companies is that their clientele is made up of businesses owned by the same people who own the insurance company. However, along with securing the advantages and control of insuring themselves, they also put their own capital at risk rather than purchasing policies with other insurance providers.

What Can Captives Cover?

Most of what captive insurance groups cover deal with casualty and property insurance including these:

  • general liability
  • professional liability
  • directors and officers liability
  • product liability
  • worker’s compensation

According to, captive workers compensation insurance is one of the most popular coverage options with these companies and even why some businesses choose to enter the captive insurance industry in the first place. If you are interested in gaining more control over insurance solutions for your business, a captive may be the right choice for you. Speaking with insurance experts will help you understand the advantages and risk you will face and whether or not they are worth it in your case.