Forming a captive insurance firm to cover your company’s risks is an excellent way of eliminating gaps in what commercial policies offer. Self-insurance via a captive offers vast risk covers that are either unavailable in the conventional market or are too costly. A captive liability firm is one that is formed for the specific reason of covering the liability of an affiliated business. If you are considering going the captive way, first understand the available types.
It is often described as ‘pure captive.’ Such firms have a single owner, to whom they offer insurance coverage. The financial officer or the risk manager at the parent firm supervises them. A resident manager mans the single-parent captive insurance.
Several laws govern the functioning of captive liability companies. In some countries, the law doesn’t allow single parent companies to sell insurance cover to independent affiliates. For instance, if …