Understanding the Benefits of Association Captives

Association Captives

Although large corporations across the United States have enjoyed the benefits of captive insurance entities for years, association captives make it possible for smaller companies of a similar industry to take part in some of the benefits as well. By binding small associations together, insurance companies can offer incredible benefits to those who may not otherwise be eligible. Here are just a few ways that joining an association captive might be beneficial.

  1. Customized Coverage: Members of an association captive are able to customize the insurance benefits to meet the needs of their specific industry. The coverage must include all members of the captive, however, and not be inclusive to one organization.
  2. Voting Rights: Companies that are members of the captive have certain voting rights when it comes to dealing with the association captive.
  3. Management of Risks: While a company may have a low risk profile, it may be required to purchase traditional insurance at a standard market rate; however, captive insurance allows the company to only pay for the lower risk profile, thereby decreasing costs.
  4. Tax Advantages: Association captives offer companies a tax advantage by allowing them to deduct the premium and the loss reserves.
  5. Reduced Operating Costs: When paying a third party for insurance coverage, a portion of your monthly premiums

    go toward the insurer’s profits and costs. Since you have eliminated the insurer by selecting a captive arrangement, the extra money stays in your business.

While each state may have slightly different regulations surrounding the creation and operation of association captives, they all work together to benefit workers across many US industries.