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Which Type of Captive Solution is Right for Your Organization?

Types of Captives

Captive Insurance Options to Meet Your Specific Needs

A captive is an insurance company created and wholly owned by one or more non-insurance companies to insure the risks of its owner (or owners). They are typically established to meet the risk management needs of the owners or members and can cover a wide range of risks. The type of entity forming captive ranges from a major multi-national corporation to a non-profit organization. Once a captive is formed, it operates like any commercial insurance company and is subject to state regulatory requirements including reporting, capital, and reserve requirements.

Why Form/Join a Captive?

The principal reasons for forming or joining a captive are:

  • Provides price stability and the potential to reduce the cost of risk funding
  • Ability to obtain broader and customized coverage including for unique or specific risks that may not be available in the commercial market
  • Greater control over claims management and loss control
  • Direct access to the reinsurance market along with greater capacity
  • Improves cash-flow timing and investment returns
  • May provide a more efficient tax structure

Types of Captives

There are a variety of types of captives to meet the insurance and risk management needs of organizations, including:

Single-Parent Captives from Caitlin Morgan

A Single-Parent (or pure) Captive is owned and controlled by one company and ensures that company and/or its affiliates. At Caitlin Morgan Insurance Services, we offer our single-parent captive solutions to business owners whose coverage needs extend beyond that of the average firm. With us, you can rest easy knowing your clients are getting the most comprehensive solutions from highly respected industry leaders. Our Single-Parent Captive solutions are the most popular type of captive insurance on the market today.


  • Minimized insurance cost – capture underwriting profit, stabilize prices, and purchase based on need
  • Improved cash flow – retention of premium dollars, tax benefits, and investment income
  • More control over all risk – greater claims control, increased coverage and capacity, underwriting flexibility, reinsurance market, and incentives for loss control
  • Virtually any line of coverage can be handled
  • Wealth accumulation – estate planning and asset growth and protection

Single-Parent Captives have been around for over 50 years and have proven to be a time-tested alternative to traditional insurance when organizing the financial risks of a commercial business. We can help you evaluate whether your client should be considering a Single-Parent Captive. This involves ensuring that there is a strong internal commitment, sufficient funding for start-up capital and expenses, a business plan approved by the selected captive domicile, the ability to meet certain minimum annual operating expenses, additional funding should loss experience be greater than expected, and ongoing monitoring and evaluation by upper management.

Association Captives from Caitlin Morgan

An Association Captive insurance company is owned by members of a common industry or trade association and is designed to insure the risks of that industry among its members. Participation is limited to members of the association. It’s similar to a group captive except that it’s sponsored or owned by a group of entities within a particular organization with common insurance needs and similar exposures. Our professionals at Caitlin Morgan Insurance Services can assist members of an association in determining whether a captive solution is right.


In addition, in offering captive services, associations can attract new members and boost their non-dues income.

  • Allows associations to tailor insurance protection where members need it most
  • Provides access to increased coverage and capacity
  • Allows for greater underwriting flexibility
  • Gain direct access to wholesale reinsurance markets
  • Increased risk control and more cost-effective administration to help lower premium costs
  • Ability to earn underwriting income as well as investment income on the reserves held to pay for future losses
  • Favorable tax benefits

Knowing how to begin to set up an Association Captive is critical. The association needs a competent and trustworthy consultant and service provider, guidance in determining the feasibility of a captive, the ability to raise the needed capital, and assistance in designing and implementing the captive. Trust the experienced professionals at Caitlin Morgan to help your association insureds evaluate whether a captive solution is appropriate for them.

Protected Cell Captives (PPC) from Caitlin Morgan

A Protected Cell Captive (PCC) is an alternative to conventional commercial insurance and offers benefits similar to those available through group and single-parent captives at reduced start-up and ongoing costs. Many clients turn to PPCs to avoid the challenges associated with insurance market cycles and to be in a better position to control their own destiny. With a PCC, separately identifiable cells are created and owned by the same or separate cell users under which the assets and liabilities of each cell are legally segregated and ring-fenced from each other under statute. Cells can issue insurance policies and access reinsurance markets, just like a standalone insurance company.


  • Relatively low set-up and administrative costs
  • Speed of set up and exit
  • Flexible allocation of capital (there is no minimum for each cell)
  • Enhanced risk management
  • Program design flexibility
  • Greater control over one’s insurance

In addition, there aren’t any restrictions as to the type of business that can be undertaken by a cell in most jurisdictions.


  • Companies too small to create their own single captives
  • Companies that don’t want to establish an association or group captive
  • Companies that want to establish joint ventures and a strategic alliance
  • Companies that would like access to specialist reinsurance markets

Potential uses and types of business for a Protected Cell Captive include funding increased deductibles for a company’s insurance policies, such as Property, Automobile, Employers Liability, and Product Liability; and writing niche insurance products where standard coverage is expensive or unavailable.

The captive experts at Caitlin Morgan Insurance Services can review the ins and outs of establishing a Protected Cell Captive and whether it makes sense for your clients. We work with some of the leading insurance PCC experts with market-leading experience in cell set-up and ongoing management.