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WHAT ARE THE BENEFITS OF A CAPTIVE/RRG? The primary benefits are financial. A captive allows its owner to capture the underwriting profits of a program when losses are lower than anticipated. The captive also earns investment income on premium dollars from the time they are paid into the captive until they are paid out to claimants. A captive typically serves as a formal funding mechanism for deductibles or self-insured retentions, as well as for risks that are otherwise uninsured or uninsurable. By housing such risks in a captive, a company can smooth the impact of those events by paying a fixed, predetermined premium to the captive, rather than paying for losses as they occur or settle. In doing so, a company can smooth both cash flow and earnings impacts. Besides the financial advantages, a captive can provide broader insurance coverage. Coverage(s) excluded by insurance companies (mold, terrorism, construction defect) can be written into the captive policies. Finally, a captive will increase the profile of risk financing within the company. The formation of this separate insurance entity with its own board of directors – typically comprised of senior legal, operating and financial officers – often serves to focus management’s attention on risk, which in turn leads to greater efforts to identify risks and reduce the frequency of claims.
	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
CLICK TO: ◘ Captive/RRG Disadvantages ◘ Annual Operating Costs ◘ Guidelines ◘ Captive Manager ◘ Feasibility Study ◘ Captive Purpose
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