The captive insurance industry was established in the 1950s. Its goal was to be an alternative to the commercial companies which, even then, were criticized for their premiums. Today, there are thousands of companies that have established captive insurance groups.

The diverse range of companies has produced a similar range of captive insurance types. While they offer similar features — stable premiums, full control, guaranteed dividends — who they cater to differs.

Should you be in the market to start or be part of a captive insurance group, here are four types to consider.

Single Parent

This is considered the standard in the captive industry. It is a subsidiary that insures the employees and facilities of one company from severe loss. Investment is made by the company’s employees. In addition, they have full say on program and premium choices.

Insustry Captive

This is a program that is established by numerous companies in one industry. For instance, a group of refineries in one state or a select region. Normally, this time of a captive insurance group is created to resolve a particular problem. For instance, an insurance not available in the commercial world.

Micro Captive

This is an insurance group with underwritten premiums of less than $2.2 million. Unlike some other captives, this one is taxed under code 831(b) of the Internal Revenue Service (IRS).

Risk Retention Group

This form of captive falls under the Liability Risk Retention Act of 1996. Captives in this category must be licensed as individual insurers in each state and need to be comprised of company owners from the same industry.

Which captive type is your organization? If you are not sure, then you want to partake in the services of a captive management group like Captive Resources. They work with you to determine what your business is, what insurance you require, and your initial investment. From there, they can provide a blueprint of the best course of action.