A captive is an insurance company that is created to insure the risk of its parent company or companies. A captive can be owned by a single company or a group of companies who are sharing in profit and losses. Historically, companies have used captives to facilitate the management of predictable property and liability risks. As health insurance costs continue to rise throughout the US businesses are searching for ways to combat these skyrocketing expenses. Captive programs have become a more standard way to manage another type of risk: employee benefits.
There are several benefits to participating in a captive such as sharing in underwriting and investment profits, lower administrative costs, and tax advantages. Deciding whether or not to participate in a captive is a long term business decision that needs to be carefully and thoroughly evaluated. At Echelon Advisors our team of advisors have extensive experience in developing plans that allow our clients the ability to take control of their benefit plan and retain the profit that would have been made by a traditional insurance company. We can strategize with your organization to develop a customized plan based on need, risk tolerance, and cost.