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
In workers compensation insurance policies and several business property and liability policies, review of the payroll of a business firm in order to determine the premium for coverage. ...
Measurement of income received by households from employment, self-employment, or investment and transfer payments, as provided monthly by the United States Department of Commerce. ...
Legislation to eliminate most tax shelters and write-offs in exchange for lower rates for both corporation and individuals. It was intended to be revenue neutral; that is, to bring in the ...
LIFE INSURANCE: specification by each state regarding the minimum assumptions that must be used in reserve calculations as theypertain to the maximum interest rate that can be assumed; ...
Liquor liability legislation in 20 states under which a dispenser of alcoholic beverages is held responsible for bodily injury and/or property damage caused by its customers to a third ...
Section of a policy that specifies the dollar amount or percentage of any loss that the insurance does not pay. Most property and medical policies specify that the first portion of any loss ...
Investment and savings position of an insured used in determining the amount of life insurance to purchase. The amount of investment and savings is subtracted from the total insurance ...
Provision in some disability income policies that provides a monthly income benefit to a disabled insured for as long as he or she remains disabled according to the definition of disability ...
Income (premiums + investment earnings) minus disbursements (dividends + death claims + policies surrendered for benefits + general expenses). ...
Have a question or comment?
We're here to help.