The success of any business depends upon the effective and efficient use of capital. While a Captive Insurance Company is commonly viewed as a disciplined way of retaining and financing risk, it can be a means to better growth and accessing corporate capital as well as implementing broader corporate strategies.
Captive Insurance has become an increasingly important tool used by companies to manage their business risk and promote strategic initiatives. Captives are essentially a form of self-insurance, with all the advantages of true insurance. These advantages include: the opportunity to earn an underwriting profit, improve risk management and loss control, coverage for unusual or hard to place risks, direct access to reinsurance and potential tax savings.
A captive insurance company allows successful businesses to reserve for these risks and, if properly structured and underwritten, premiums paid by your business to your captive insurance company may be tax deductible as an ordinary and necessary business expense.