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
Element used to adjust losses to reflect the incurred but not reported claim (IBNR) under the retrospective method of rating. ...
Death caused by a person without legal justification. Wrongful death may be the result of negligence, such as when a drunken driver hits and kills someone; or it may be intentional, as when ...
Insurance company incorporated according to the laws of the state in which a risk is located and the policy issued. The insurance company is domiciled in that state. ...
Circumstances that encourage the organization of pension plans by employers. For example, employer contributions are tax deductible as business expenses and not currently taxable income to ...
Written contract between an insured and an insurance company stating the obligations and responsibilities of each party. ...
Insurance policy that differs from the standard form. ...
Same as term Deviated Rate: rates used by a property and casualty insurance company that are different from that suggested by a rating bureau. An insurance company may use deviated rates ...
Actuary, appointed by the life insurance company, required by the national association of insurance commissioners (naic) under the naic: standard valuation law to provide an opinion as to ...
Type of pension in which benefits may vary depending on the investment performance of the pension plan assets. Contributions are made to fund a target benefit, such as 35% of compensation, ...
Have a question or comment?
We're here to help.