Captive Insurance Services
A Captive Insurance Consulting company is a company established to insure the risks of organizations affiliated with its owner(s). Traditionally, a captive insurance company may only be formed with the permission of regulatory authorities in the insurer's home territory (its domicile). An Insurance Commissioner, either a civil servant or a political appointee, monitors insurers' operations to ensure that specified solvency and other regulatory parameters are observed.
There are 5,000± captive insurance companies in the world, with most being sponsored by United States entities. Although sponsored by U.S. based companies, most captive are domiciled (incorporated) outside of the U.S.
Many conventional insurance companies began their corporate existence as captive insurers and grew into large-scale insurance companies. USAA, Highlands, and American General are cases in point.
Small insurance companies benefit from tax advantages to help facilitate their growth, which in part compensates for the complexity and cost of their structure and operations. Nonetheless, over the last 80 years less than 1300 insurance companies have been issued a tax exempt determination letter ruling by the Internal Revenue Service. The expertise of the Capstone Team has lead to what is believed to be the industry's best track record in obtaining such rulings. Together with your captive insurer's legal and tax advisors, our adherence to high standards of ongoing administration helps ensure the continued maintenance of the tax exemption determination.
Captive insurance planning is an alternative risk management and risk financing technique that can be used to accomplish several purposes including insuring the hidden risks of its insureds. See Why Form a Captive?
Usually a captive insurance company writes insurance coverages on closely affiliated businesses that either include the captive's parent or the affiliated businesses that share a common parent with the captive.