What is a Captive?

Captive insurance companies are a frequently used, proven component of a risk management program and an efficient method for funding the retained business risks of their owners. They permit a business owner to self insure select exposures and to create the opportunity to capture the financial benefits of good results. Captive insurance companies are legal entities authorized and supervised by the insurance department of the state in which the captive insurance company is formed.

Captives (Owner Controlled Insurance Companies) in Farming:

If your business has over $6 million in sales and is spending over $200,000 annually on insurance premiums, the Captive is something you should explore. There may be strong financial benefits available to you and your farm.

  • Producers can profit from owning their own insurance company using proven, secure captive structures and programs. This risk management solution is growing fast within the Agricultural Industry.
  • Historically, captives have been used by large corporations. Today, captive programs are available for individual farmers and local agribusinesses.
  • Captive programs are available for farmer-produced commodities. Not only do captive programs protect against a loss, but they also provide the opportunity to grow a financial asset.
  • Captives allow the flexibility to manage your farming risks.
  • A captive provides you with potential tax deductions on your premium while providing you with the opportunity to build financial equity. The captive is protected from creditors and helps you build up cash and equity.
  • A captive can be used to insure a number of risks that farmers face, including crop insurance, farm property, product recall, environmental issues, workers’ compensation, auto liability and general liability.
  • An advantage of a captive is that it can insure against losses that are not covered by traditional insurance policies, such as claims of foodborne illnesses and environmental issues.

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