What is a Captive?
A captive insurance company insures all or part of the risks
of its parent. This unique company is created when a business or group of
businesses form a corporation to insure or reinsure their own risk. These
self-insurance vehicles can allow New York's businesses to:
- pay lower premiums;
- tailor coverage to their specific needs;
- accumulate investment income to help reduce net loss;
- access the reinsurance markets to transfer risk; and
- gain greater control over claims and over their broad
risk management operations.
Types of Captives:
- A "Pure" captive is owned and controlled by
one company and insures that company and/or its subsidiaries.
- A group captive is an insurance company owned and controlled
by two or more unaffiliated organizations which is formed to provide insurance
to its group or association of owners. The owners usually consist of companies
from a related business field.