The Benefits The Captive Advantage offers the following potential benefits to its members: (Click the various topics below for more information) Reduce Insurance Cost By eliminating the overhead of big insurance companies, a captive can reduce insurance costs and pocket the difference. Capture Underwriting Profit Paying premiums to a captive allows the owners to capture the underwriting profit that would have gone to the large insurance carrier. Pricing Stability A captive insurance company is less vulnerable to the cyclical nature of hard and soft markets that affect the conventional insurance market. Thus, a captive can aid a business that requires accurate financial projections. Purchase Based on Need Captives allow you to avoid the "one-size-fits-all" coverage offered by the large carries and make it possible to cover only the risks specific to your needs. Greater Control over Claims The captive owner has overall control of the claims process, including settlement decisions, meaning that others cannot make a claim on the business' insurance policies. Access Reinsurance Market Reinsurance is available only to insurance companies and can provide coverage at advantageous rates. Reinsurance provides excellent flexibility because it allows the captive to precisely determine the amount of risk to be held by the captive, and the amount to be reinsured. Incentives for Loss Control Claims are handled differently when you are dealing with your own money. Underwriting Flexibility The insured business can determine the policy terms, whether to write or renew policies, and the types of insurance coverage to write, which can vary from year to year. Increase Coverage A captive can write the very specific coverage desired by the insured. Increase Capacity The captive's risk taking capacity is only limited by its capital, not by other market forces or arbitrary decisions. Retain Premium Dollars Instead of paying large insurance premiums to an insurance company, retain those dollars in your captive, keeping them in the same economic family. Investment Income Premiums paid to a captive can be invested in a variety of ways. The dividends realized from those investments can then be retained by the captive or distributed to the owners. Additional Profit Center Captives can operate as a separate profit center by insuring the risks of third parties. Asset Growth Insurance premiums are an expense to the parent company and flow tax free to the insurance company, where they grow in anticipation of future claims. With annual premiums, the asset base of the captive can quickly grow to be very large. Asset Protection A captive can safely protect assets from legal attack by creditors and predators. The captive owner has overall control of the claims process, meaning that the only business that can file a claim is the parent company.