One advantage of rent-a-captive is that they do not require users to contribute capital to them, although users do pay a fee to the captive manager that typically runs from 1% to 3% of the gross written premiums placed in the captive.


A rent-a-captive parent may have hundreds of cells.  The losses and expenses of each segregated cell is protected from the losses of any other cell.  In a Protected Cell structure the assets of a given cell are legally separated from those of all other cells in the Captive as enacted under the laws of a number of U.S. State and Off-Shore Jurisdictions.  Thus the bankruptcy or liquidation of one cell does not imperil the assets of any other.


There are a number of reasons that a Business Owner or Professional may want to organize a Parent captive or set up a segregated cell captive in a Group Captive, such as; to provide coverage not now available from Commercial Insurance Companies, to obtain rates for the business or the professional that are better for preferred risks, or to accommodate an insured that would like to assume a greater portion of its own risk.  For example someone may want to assume $200,000 of its own risk, however, as a deductible or self-insured the business or professional can only take a business expense when a claim is paid.  If the self-insured or deductible is placed in a segregated captive for the business owner or professional the insurance premium paid to the Cell Captive can be deducted from the business or professionals income. The before tax contribution to the self-insured captive can be invested as allowed under insurance company investment laws. The earning of the captive can be earned tax free thru contributions to the Surplus of the company, up to a maximum dictated by the state of domicile and the risk assumed.


Risks assumed by the Captive can be for; life, health, liability, employee benefits, property, workers’ compensation (on a restricted and approved basis), occupational accident coverage for non-mandated workers’ compensation persons, and other creative Risk Transfer uses.





F. Darrell Lindsey
U.S. State Licensed Agent/Broker
U.S. Corporate Enterprise Risk Management Consultant (ERM)
U.S. State Approved Captive/RRG/Self Insured Manager
U.S. Approved Self-Funded Health & W. C. Plan Manager