Captive insurance has nothing to do with kidnapping. Rather, it’s a completely different way for a business to insure against risks. In effect, the business sets up a separate legal entity (a “captive insurance company”) that acts as the insurer itself, rather than taking out a policy with a traditional insurance company.
Common reasons for doing this include:
Legally, the business itself will own and control the captive insurance company. In practice, it often makes sense to get outside experts to oversee the day-to-day management. This is partly to reduce the administration and bureaucracy involved and partly because managers can lend their insight on ways to improve the tax position and avoid any legal pitfalls.
If you think captive insurance could work for your business, or would like to learn more about this type of commercial insurance, contact us today to discuss how we may be able to help.