A captive insurance company is a privately owned insurance company that insures the risks of its owner. There are several types of captives including single-parent, multi-parent, agency, and protected cell captives. Captive Dynamics helps potential captive owners find and select the best captive manager to form and manage their captive. An ideal captive insurance company is a single-parent captive that can provide benefits like asset protection, estate planning, and tax management in addition to insuring risks.

1. What?
A “Captive” is a privately owned insurance company that was
formed to provide insurance for its owner’s interests.
The basic types of Captives are: Single Parent, Multi-Parent, Agency and Cell Captives.
Risk Retention Groups are a special sort of Agency Captive. Small Captives, can be either
Single Parent Captives or components of a Group Captive. Of the four types, Single
Parent Captives allow the greatest flexibility and array of potential benefits to their
owners but Protected Cell Captives offset many of those advantages by requiring less
money and because they can often be formed and capitalized within a few weeks.
Captive Dynamics works with Captive Managers and Potential Captive Owners. Think of
us as a two-way filter, a broker that separates Captive managers from customers of little
or no interest to them, and spares you from time spent dealing with managers whose
interests,capabilities or biases don’t match up with yours.
First you will form a Captive, and then your Captive Manager will handle it’s day to day
affairs, consulting you as necessary. The skills used to form and manage well designed
Captives are far from commonplace. The best managers are well versed in law,
insurance, reinsurance, estate planning, asset protection, taxation and corporate
affairs. They are also well schooled in the pros and cons of the various domiciles that
could harbor your Captive. They will influence the use of a substantial sum of your
money. You will be dealing with them on a regular basis. Select a Captive manager who
you like and respect. We can help you find one.
Our services add nothing to the cost of forming a Captive. The exception to that rule
pertains to the formation of some Small Captives. In those cases, Captive Dynamics may
charge a fee or commission that is mutually agreeable.
Attributes of An Ideal Captive Insurance Company:
Ideally, one would own and control it outright. Group Captives, Association Captives and
Risk Retention Groups have their place and serve useful purposes, but they are a step
behind Single Parent Captives in terms of utility or return on investment.
In addition to solving many insurance problems and improving corporate risk
management, a Single Parent Captive can be an Asset Protection tool, an effective
Estate Planning device and a valuable Tax Management assist. It is in your interest to
deal with a Captive Manager whose skills transcend insurance.

2. Attributes of a Good Captive Management Company:
A superior Captive management organization will have expertise in Insurance,
Reinsurance, Corporate Dynamics, Accounting, Taxation, Estate Planning, Asset
Protection, Employee Benefit Programs and Law.
The person assigned as the Captive’s account manager will have ready access to the
expertise. When you need an answer that your account manager needs to research,
things unravel if the accounting expert is in Washington, the lawyer is in New York and
the reinsurance expert from Chicago is on a plane to London.
Captive Managers must not be conflicted by concerns that what is good for you may be
costly for them.
What can a Captive insure?
Everything you currently self-insure
Jumbo Deductibles*
Jumbo Self-insured Retentions*
Coverage you may have considered but deemed to be overpriced.
Some typical examples of risks covered by Captives:
Contractual Liability
Construction Defects
Professional Errors and Omissions Liability
Directors & Officers Liability
Punitive Damages Liability
Employment Practices Liability
Earthquake
Flood
Mold
Litigation Expense
Risks excluded by your current policies
Real Property
Machinery & Equipment
In most cases, The Captive insures a large chunk of the low end of any of the above
risks of loss. Beyond that point, reinsurance is used creatively.
*Jumbos become the bottom end of in-force coverage.