It used to take a long time, in many cases a year or more, for a business to set-up a captive insurance company. And stories about the long road many companies faced in setting up their captive arrangement linger on, often in the minds and lore of “old guard” captive managers and attorneys who were able to charge larger fees by leading captive candidates through a long, over-analytical, dragged-out process to set up their own insurance company. This perception was further aided by domiciles and regulators who made the process unnecessarily arduous.
Fortunately, much has changed in the captive industry over the last ten years, making a past reality that “It Takes Too Long To Set Up A CIC” our choice for Myth #8.
Competition among domiciles has forced the captive industry to be far more efficient. In many cases, domiciles and regulators will work with captive managers and businesses to help them with the process to set-up their captive insurance companies.
It takes approximately sixty days to set-up a fully functioning captive insurance company. This includes performing a feasibility study, developing a business plan, obtaining regulatory approval, setting up the insurance company corporation, obtaining an insurance license, receiving premiums and issuing written insurance policies.
This sixty day process does not have to be arduous. A good captive manager will do ninety percent of the work for the business owner and coordinate the remaining 10%. It is also critical to work with a captive manager who has solid relationships with regulators where you plan to domicile your captive. This can help ensure your captive application is processed quickly and efficiently.
In almost all cases, it is well worth the time and effort to improve risk management, achieve near-perfect asset protection and save up to $600,000 in taxes annually.