Captive Insurance Company
Definition of "Captive insurance company"
Company formed to insure the risks of its parent corporation. Reasons for forming a captive insurance company include:
- Instances when insurance cannot be purchased from commercial insurance companies for a business risk. In many instances companies within an industry form a joint captive insurance company for that reason.
- Premiums paid to a captive insurance company are deductible as a business expense for tax purposes according to the InternalRevenue Service. However, sums set aside in a self insurance program are not deductible as a business expense.
- Insurance can be obtained through the international reinsurance market at a more favorable premium, with higher limits of cover age.
- Investment returns can be obtained directly on its invested capital.
Popular Insurance Terms
Written agreement that puts insurance coverage into effect. ...
Method of rating that compares property to be insured to a standard and adjusts the rate for deviations from the standard. A standard building is situated in a standard city of specific ...
Analysis of uncertainty of financial loss. This classification can be according to whether a risk is fundamental, particular, pure, speculative, dynamic, or static. In life insurance the ...
End of a defined time period that dividends become payable to the policyholder. ...
Coverage on an all risks basis for fur garments belonging to customers of a furrier. ...
Condition in which the occupancy or the purposes for which the premises are being used as described in the insurance policy change so as to result in an increased risk. The policy is void ...
Calculation of insurance premiums based on an age less than the current age of the insured. ...
Rate applied when two or more separate buildings are insured under one policy, and/or when two or more separate contents are insured under one policy. ...
Same as term Excess of Loss Reinsurance: method whereby an insurer pays the amount of each claim for each risk up to a limit determined in advance and the re-insurer pays the amount of the ...
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