Learn more
about Captives
What are the benefits of a Captive?
- Tailored coverage tailored to meet your risk needs
- Reduced operating costs
- Increased coverage
- Improved cash flow
- New revenue from insurance and warranties
- Increased Investment income
- Direct access to wholesale reinsurance markets
- Funding and underwriting flexibility
- Greater control over claims
- Smaller deductibles
- Additional negotiating leverage with underwriters
- Incentives for loss control
- Better asset protection
- Tax benefits
Is captive insurance the same as self insurance?
No. With self insurance, you are responsible for 100% of any losses and you receive no tax deductions.
With Captives you are re-insured for any losses and you get significant tax deductions.
Is a captive right for me and how is the coverage different than my current coverage?
Captive insurance refers to a subsidiary corporation that is established to provide insurance to a parent company and its affiliates. A captive insurance company is an option for many corporations and groups that want to take financial control and manage risks by underwriting their own insurance rather than paying premiums to third-party insurers.
Industries that Utilize Captive Insurance
- Physicians
- Medical
- Manufacturers
- Construction
- Oil & Gas
- Transportation
- Wholesale
- Auto
- Retail
- Professional Services
All businesses have risk and could possibly utilize a captive.
Case Law
The captive insurance law is constantly evolving; it is imperative that a captive be professionally designed and managed to meet all IRS guidelines. Properly formed and managed captives have consistently been upheld as indicated in the following cases.
United Parcel Service of America v. Commissioner,
254 F.3d 1014 (11th Cir. 2001)
Hospital Corp. of America & Subsidiaries v. Commissioner,
T.C. Memo 1997-482
Kidde Industries Inc. v. United States 40 Fed Cl. 42
(U.S. Claims 1997)
Malone & Hyde Inc. & Subsidiaries v. Commissioner,
62 F 3d 835 (6th Cir. 1995)
Ocean Drilling & Exploration Co. v. United States,
988 F 2d. 1135 (Fed Cir. 1993)
Harper v. Commissioner, 979 F.2d 1341 (U.S. App. 1992)
Amerco Inc. & Subsidiaries v. Commissioner,
96 T.C 18 (1991)
Gulf Oil Corp. v. Commissioner, 914 F.2d 396 (U.S. App 1990)
Humana Inc. v. Commissioner, 881 F.2d 247 (6th Cir. 1989)
Clougherty Packing Co. v. Commissioner,
811 F. 2d 1297 (9th Cir. 1987)
Beech Aircraft Corp. v. United States,
797 F. 2d 920 (10th Cir. 1986)
Crawford Fitting Co. v. United States,
606 F. Supp. 136 (N.D. Ohio 1985)
Allied Fidelity Corp. v. Commissioner,
572 F. 2d 1190 (7th Cir. 1978)
Commissioner v. Treganowan, 183 F. 2d 288 (2nd Cir. 1950)
Helvering v. Le Gierse, 312 U.S. 531 (1941)
