Differences Between Single-Parent, Group, and Association Captives

An increasing number of businesses are attracted to captive insurance as an innovative way to manage their own risks without being confined to the limits of a traditional insurance policy. However, it can be difficult to choose among the various options. Here are the differences between a single-parent, group, and association captive insurance company.

Single-Parent 

A single-parent captive insurance company has only one owner that operates solely for the benefit of that business. This is the simplest way to receive the benefits of predictable pricing and coverage.

Group

A group captive insurance company differs from single-parent in that more than one entity owns it. While group insurance creates a somewhat more complicated situation, it is a great choice for small businesses that may not have enough money to form a single-parent captive on their own.

Association

Association captive insurance is similar to group captive in that multiple businesses own and benefit from it. The difference is that members are usually limited to businesses within the same industry. This ensures that they all have similar risks and needs.

When deciding among the forms of captive insurance, a company should ask questions about cost of premiums, decision-making, and provisions for withdrawal from a group or association. That way they can receive the maximum benefit from this method of risk management.