“A captive insurance company is one that is owned by its insureds. Often, it is closely held by a major corporation. The insured is active in the underwriting, management, and operations of the company.Captives may be used to provide all of the insurance of a parent company or may be used to perform certain specific functions. For example, a captive may be used to purchase “”deductible buyback.”” In this case, the captive insurance company funds some or all of the company’s deductible.Captives may also be owned by associations or groups. In this case, the captive is owned either by the members of the association or by the association itself. Generally, premiums paid to a captive owned by one entity are not tax deductible while premiums paid to a group or association captive are. Captives may be “”onshore”” (domiciled in a U.S. state or
territory) or “”offshore”” (domiciled outside of the U.S.).”
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A company formed exclusively to insure a parent company.
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US: A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners.
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UK: a company whose business is wholly or mainly derived from a company or group of companies of which it is usually a subsidiary or associated company.
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UK: Company owned and operated by the corporation it insures. Usually registered and domiciled in tax havens, e.g. Bermuda, captives combine tax efficiency with the benefit of self-insurance and/or mutual insurance. Most captives have a presence in the reinsurance market (inward and outward) and some have become substantial writers of third party business. See PROTECTED CELL COMPANIES; RENT-A-CAPTIVE.
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MEDICAL,USA: Insurance company formed and controlled by a separate company, whose purpose is to insure the risks of its owner(s) such as hospitals, physicians, companies that extend credit to customers, banks, and retailers. Also called captive insurer.