What is a Single Parent Captive?
Single parent captives are still the most common type of captive being used today. This type of captive is owned by one company, typically the one being insured. It is often the choice of larger insureds with more sophisticated risk management proﬁles. Single parent captives have been in use for over 50 years, which means this model has stood the test of time. They are an eﬀective alternative to traditional insurance for managing the risks of commercial business.
BENEFITS OF ESTABLISHING A SINGLE PARENT CAPTIVE
Establishing a captive insurance company often provides signiﬁcant beneﬁts to organizations and risk management professionals. Single parent captives are often used to provide reinsurance on workers compensation programs, and are increasingly being used for property insurance, directors and oﬃcers liability, terrorism, and toxic mold. Captives help organizations mitigate speciﬁc risks associated with their lines of business.
IS SINGLE PARENT CAPTIVE INSURANCE RIGHT FOR YOUR ORGANIZATION?
As organizations of all sizes seek to gain greater control over the costs and opportunities of risk management, captive insurance continues to increase in popularity as an alternative or enhancement to purchasing insurance in the traditional marketplace. Having a captive insurance company gives organizations of all sizes better control over risk management and can reduce the overall cost of risk. However, when deciding whether to form a captive, companies need to justify the investments of time and resources needed to form and operate a successful captive insurance company. While captive insurance companies can be valuable strategic tools, they are not always the best approach for every organization.