5 Lesser-known Benefits of Captive Insurance for Business

Some form of insurance always protects a successful business. The insurance provides safety to the owner and makes sure a business keeps its operation running even in the wake of huge losses. Captive insurance is an insurance company primarily owned by a businessman looking to protect his main business, assets, and investments. Firms like the Talisman Casualty a protected cell captive insurance company in Nevada are making Captive insurance a trend, whereas earlier, they mainly operated offshores. While this Captive insurance can protect an owner against significant damages, the following are some lesser-known related benefits.


1- Tax Management

Business owners all over the world seek out ways to manage tax burdens. Taxes are charged on everything; from utilities to assets, and a business can majorly suffer if it is heavily taxed during the financial year. A provision or a backup reserve for losses is mostly non-taxable. But if those reserves were converted into captive insurances, it will help the owner manage the loss and the taxation that comes with it.

2- Personal Guarantee

It is an open secret that all the losses suffered by a business are the owner’s responsibility. Businesses always suffer from losses at some point, but if the owner is not ready for it, the business will suffer massively and probably have to discontinue its operations. Since captive insurance‚Äôs primary purpose is to protect the owner, it can be a safe bet when a considerable loss threatens to disrupt business operations.

3- Protection by the Ownership

Captive insurance companies are mostly owned by businessmen looking to protect their primary businesses. Previously, these companies operated offshores and were usually unheard of other than people in financial sectors or involved in high-risk businesses. But their true worth and importance have become evident in recent years. Therefore, all the operations and finances are controlled by the business owner.

4- Increased Income

Since Captive insurance is a type of insurance company, it still collects premiums on insurance policies. These premiums can help boost the parent company’s finances; this is why they are getting more and more popular. But that doesn’t mean that this is its sole purpose; under some laws, premium income is exempt from any tax unless it crosses $2.2 million annually. This settlement makes it an ideal choice for business owners looking to generate extra income.

5- Protection from Bankruptcy

A business will always have a backup plan to cover up the losses or any natural catastrophe in most cases. But a business can be further protected by such losses if it invests in a captive insurance company. If the losses exceed the backup reserves, captive insurance comes to the rescue in such scenarios.

New in its operation but not in the concept, Captive insurance is a very helpful financial backing for all mid-ranging to high flying businesses. It also ensures the smooth operation of a business without the fear of losing assets. It is an excellent alternative risk transfer opportunity for property and liability insurance.

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