Captive insurance is the best alternative for organizations spending minimum $2 lakhs yearly on the property, casualty and other insurance policies.
What are captives?
Captives allow organizations to attain insurance coverage tailored to suit its unique risks instead of an average coverage provided. Nick Kahrilas say that captives offer tax benefits to users and so claim handling service is much better in comparison.
Captive can be customised in accordance to each participant’s unique needs, ensuing safer workplace and much constructive loss experience. Strict guidelines can get planned and imposed by captives, which is preferable to allow commercial insurer’s self serving interests to control instead of allowing the insured desire to dictate how the claims are handled.
Awesome reasons to use captive insurance
Investment income - Captive insurance owners control the temperament of loss funds until the losses are paid.
Tax benefits - Captive insurance coverage offers tax deduction to parent company.
Enhanced cash flow - Captive insurance provides financial rewards for controlling losses efficiently. Therefore reduces losses increases profits.
Broad coverage - Captive insurer can provide coverage for tricky risks by successfully customizing it to fit precise needs.
Pricing & availability - As captive matures pricing stability gets achieved. It extends its personal risk retention capabilities and insulate from changes in commercial insurance sector.
As per Wikipedia, captive insurance arrangement is promoted by the IRS or Internal Revenue Service. As captives are sophisticated tax structures business owners engage captive managers and tax professionals to attain administrative services.