It can be challenging to find the best insurance. Companies start by performing a careful risk assessment, and then choosing the proper insurance to offset those risks. More often than not, the insurance that covers company risk is expensive. Insurance costs directly impact the cash flow, and must fit into a careful budget in order to keep operations profitable. Often, the right solution is to find a creative structuring of the insurance program. A rent a captive program is often the best cost-conscious solution for a company’s insurance needs.
Large companies form an insurance captive to control the costs of covering their own particular business. Most small and medium-sized companies do not have the funds to create such an organization, and meet the governmental regulatory requirements for a captive. Fortunately, insurance companies have recognized the needs of smaller firms to participate in a captive program, and offer rent a captive programs to meet those needs.
These programs are similar to association programs, where a group of companies become stockholders in a single captive. On the other hand, it is different in that members of a rent a captive program do not have ownership. They have fewer rights when it comes to the captive. However, many companies do not want to pay for the ownership rights. For them, participation in a captive program is enough to meet both their insurance needs and their cost budget.