Whatever the size of the business, it's likely a captive insurance company can aid the organization's risk management program and reduce the total cost of risk. Captives allow businesses to reduce their reliance on the commercial insurance market while stabilizing insurance costs.
Corporate governance is critically important for captive insurance companies, as well as the managers and other service providers the captive employs. It's the captive's owner, though, that bears the ultimate responsibility for governance. The captive owner is responsible for operating a regulated insurance company and the associated compliance.
Captives can play an important role in emerging risks such as cyber risks or with volatility such as that seen with property risks.
Captive insurance companies have evolved into tools that allow organizations to implement their risk management strategies in a more comprehensive way.
Captive insurance is a type of self-insurance that is available to most business owners, regardless of the size of their enterprise, that offers all the benefits of a fully self-funded insurance plan while providing additional incentives and a risk management framework.