First Captive formed by Youngstown Steel in Ohio.
A captive insurance company (captive) is a real insurance company created by a business or its owners to primarily provide property and casualty insurance to affiliated businesses. Because captives are usually owned by the same economic interests that own the operating business, the captive can be considered a “formal” method of self-insuring various risks. Captives have been around for at least 70 years and have commonly been used by large businesses for decades. Because the cost and regulatory burden of operating a captive has declined considerably in recent years, smaller businesses can now benefit from them as well. To legally sell insurance, captives must be licensed by the state in which they operate or another appropriate jurisdiction.
|Formally insuring risks presently self-insured via after-tax reserves. Most small businesses purchase third-party insurance to protect against only a small portion of the potential risks to which they are exposed, including those that are underinsured commercially. Most risks remain informally-self insured, (i.e. uninsured) because the cost of obtaining third-party insurance is simply too high given the business owner’s assessment of the likelihood of loss.
A blended approach includes commercial insurance, captive insurance and risk mitigation strategies
* CIC Services is experienced in designing and implementing all types of captives.