Additional benefits include: 

· Cost reduction/stabilization     

       Captives are often formed by insureds that have grown tired of the vagaries and undulations of the retail insurance market.  Bypassing the retail insurance market can often lead to  cost savings through the elimination or reduction of profit loads, broker commissions and administrative costs. 

· Provision of coverage not otherwise available 

       Captives can often provide coverage for unique or specific risk that would not otherwise be transferable in the retail market. 

· Capitalizing on a better than average claims experience  

       Why subject yourself to the brutal rate making policies of commercial carriers?  Often, the parent company is better served retaining the risk inside the captive as opposed to subsidizing the broader risk pool’s poor experience.

· Tax Treatment

      Captives are able to accrue tax deductible reserves for unpaid claims, whether known or estimated. 

· Access to reinsurance

       A captive alone is subject to capacity limitations.  However, captives can often access the reinsurance market to provide increased limits.  Under certain circumstances, captives can offer more coverage than that which is available in the retail market. 

· Recapture underwriting profit and investment income

       Hard markets can be extremely onerous on insurance buyers.  Large premiums create a drag on parent company profitability.  To a company with better than average claims experience this equates to a sunk cost, never to be recaptured.   

        A captive can mitigate this burden.  Underwriting profit and investment income that typically stays with commercial insurers can be recaptured by the parent company. 

· Provide coverage for strategic partners

        Assuming it is actuarially sensible, captives can write risks for industry peers, wholesalers, contractors or any other area where the traditional market’s rate is undesirable.   

· Improve Risk Management

     Captives will positively influence operational behavior and enhance loss controls.  The tremendous amount of data housed in the captive will help the parent company identify areas for improvement.