Insurance News
Types Of Captives
Single-Parent Captive
Insures the risks of related companies. The most common form of captive.
Group / Association Captive
Insures the risks of companies in an industry group, franchise, or other association. A group captive can share the risk among several participants and spread the fixed cost of the captive among many members.
Agency Captive
Formed by insurance brokers to allow them to participate in high-quality risks which they control. For example, a broker specializing in the crane industry can organize a captive just for his or her crane clients, thereby providing better coverage, capacity, price and service.
Rent-a-Captive
Provides captive facilities on a “rental” basis. Protected cell captives (PCC) enables users to legally segregate their assets and liabilities within a separate vehicle, or cell. This allows many cells to be created within the same captive. Most jurisdictions now allow “cell” captive structures.
Risk Retention Group
A group self-insurance plan or group captive operating under the Liability Risk Retention Act of 1986. A risk retention group can cover the liability exposures, other than workers compensation, of its owners. Once licensed in a state it can operate in any other state without additional licensing. This is often used to insure medical malpractice risks, and avoid of a fronting insurance company.
Special Purpose Vehicles (“SPVs”)
SPVs are used in risk securitization. They are reinsurance companies that issue reinsurance contracts to their parent and cede the risk to the capital markets by way of a bond issue.
