Umbrella

August 05, 2014
From Richard Poling, Sr. Vice President, RiskCap:

Yes - but typically as an excess policy over a high self insured retention. For instance, the excess carrier will write a policy with several million of limits over a $1mm retention. The captive takes the retention - deductible reimbursement to parent or some similar structure.

This usually only works with single parent types of captives. A captive writing direct to third parties, even as part of a deductible reimbursement plan, would be unauthorized insurance (a felony in some states). Therefore, the structure has to be carefully thought through to be legal.