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Finding the Right Insurance for Your Company Isn’t Always Easy.
This type of insurance can offer advantages in risk management, insurance savings, wealth transfer, and taxes. It’s an alternative type of risk transfer used by major corporations, nonprofit organizations, and medium-sized businesses
What Are the Benefits of Captive Insurance?
Reduced cost of risk
Cash flow benefits
Coverage not available from commercial insurers
Direct access to the international market of reinsurers, which can be more flexible
Increased bargaining power with commercial insurers (if the captive holds a percentage of insurance)
Cash flow advantages on income taxes (premiums paid to a captive insurer can be tax-deductible, depending on several factors)
Let’s look at an example.
Imagine your company pays an insurance carrier $450,000 per year in premiums, but your annual claims only average about $125,000. That means the insurance company is pocketing $325,000 annually.