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Basics of captive insurance companies: an alternative risk financing tool

In today’s hardening insurance market, there is no shortage of news about captive insurance companies and their ability to subsidize or even replace traditional insurance. Many articles assume the reader has a basic understanding of captive insurance company utilization and operation, but that is not always the case. In this paper, we take a step back and explain some of the basics of captives.

In this paper, the esteemed authors and experts, Max Koonce, Sedgwick Chief Claims Office; David Stills, Sedgwick Senior Vice President, Carrier and Risk Practice and Chris Mandel, RIMS - CRMP President & Managing consultant from Excellence in Risk Management, LLC will share insights and the basics on determining whether a captive is right for your company.

Topics in the paper include:

  • A captive insurance company – defined
  • How does a captive work?
  • Is a captive “right” for every company
  • Captive advantages and benefits

While a captive may or may not be appropriate for your company, risk professionals should have a basic understanding of the benefits and downsides of captive utilization.

Selecting the right partners for captive exploration, establishment, and management is essential. It is important to consider partner relationships early in the due diligence and feasibility processes. These selected partners will be able to guide the organization in the development of strategies and tactics necessary to prevent and manage losses over the long-term. This will ultimately drive captive sustainability and success.

Click here to read the full paper.

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