Improved Cash Flow
A Captive allows you to control an investment portfolio funded by insurance premiums. It also allows the money typically paid to third-party insurers to be recaptured by your business, unless claims are paid.
A Captive gives you more control over your financial projections and planning because it is less vulnerable to the erratic, cyclical nature of the conventional insurance market.
Improved Risk Management and Profitability
A Captive can provide great incentives to improve the risk management philosophy throughout your organization. Conventional insurance is typically provided on a guaranteed cost basis and there is little incentive to improve risk management, as there is no participation in the profitability of the insurance program. However, with a Captive, you benefit from good claims experience, and surplus profit can be used to pay claims, invest or distribute to the shareholder by way of qualified future dividends.
A Captive can provide coverage that is often unavailable or cost-prohibitive to obtain from conventional insurance companies. This broader coverage is available for such things as historic loss experience for a sector or industry, deductible reimbursement, administrative/regulatory acts, construction defect, earthquake, wind, weather, mold, product liability, employment practices, product warranty, subsidence, wrongful acts, professional liability and litigation defense.