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ILLINOIS CAPTIVE & ALTERNATIVE RISK FUNDING INSURANCE ASSOCIATION

Captives

Definition

Illinois permits three types of captives. Pure captives insure only the risks of its parent company and/or its affiliates. Association captives insure the risks of the association members and their affiliates. Industrial insured captives insure the risks of industrial insureds and their affiliates. Association or industrial captives may be organized as either stock or mutual companies. A pure captive may be organized only as a stock company.

Advantages:

• Owner control over policy form, pricing and claims.
• Can use alternative funding for organizational capital and surplus, such as letters of credit.
• Not required to have statutory deposit of $1.5 million.
• May transact all lines of commercial business, including stop-loss insurance, and reinsure employer s liability, self-funded employee disability or welfare plan.

Disadvantages:

• Must comply with multiple state filing and licensing requirements.
• No deductibility for premium unless write more than 30% unrelated risk.
• Not permitted to write life, accident and health, personal lines or worker s compensation.

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2003 Contact Information:

Chad Kunkel
Gallagher Captive Services, Inc.
Two Pierce Place
Itasca, IL 60143
630-285-4176
630-285-4000 (fax)
chad_kunkel@ajg.com