In the last 20 years, many small businesses have begun to insure their very own risks through a product called "Captive Insurance." Small captives (also known as single-parent... more
In the last 20 years, many small businesses have begun to insure their very own risks through a product called "Captive Insurance." Small captives (also known as single-parent captives) are insurance companies established by the owners of closely held businesses looking to insure risks that are either too costly or too hard to insure through the traditional insurance marketplace. Builder’s Risk Insurance Brad Barros, a specialist in the field of captive insurance, explains how "all captives are treated as corporations and must certanly be managed in a technique in keeping with rules established with both the IRS and the correct insurance regulator."
Based on Barros, often single parent captives are owned with a trust, partnership and other structure established by the premium payer or his family. When properly designed and administered, a small business may make tax-deductible premium payments for their related-party insurance company. According to circumstances, underwriting profits, if any,... less