This white paper discusses in detail the specifics of how owner-owned captives work and what you need to know to prepare to enter a captive. Owner-owned captives are one of the most common types of captives.
When an organization is considering the possibility of entering a captive, some of the likely reasons might include premium costs, the company’s own safety record, and a need to have much more control and/or flexibility over the financial aspects of their insurance costs. Once an organization has made the decision to go the captive route, however, they will head full speed directly into the center of the insurance world. They have spent their time on the client side of the insurance world, but now they will be entering into areas that clients do not normally see. They will see some of the underwriting aspects; they will see what a reinsurer does; and they will work with actuarial firms, loss prevention service providers, and third-party claims management services.
In this white paper, we look at a fictitious owner-owned captive that is relatively close to what we might expect to see out in the real world. The white paper includes a list and description of typical service professionals who are employed to meet the needs of the captive’s day-to-day operations. In addition, this white paper discusses the process of a normal year in an owner-owned captive and includes several illustrations to help the reader understand how losses are covered in a captive situation.