Could a Captive Be Right for You?

Captive Insurance programs can be an attractive alternative to the traditional insurance market. Members generally find that they have a new level of control and financial independence, breaking themselves from the cyclical nature of the traditional insurance marketplace. At M3, we embrace that a captive strategy can be extremely useful for clients looking for additional control of their risk management program.

Captive Options

Captives can be structured in several different ways to provide optimal benefits for specific circumstances and risks. Over the years a variety of captive types have evolved, including:

  • Single Parent Captive
  • Group Captive
  • Risk Retention Groups
  • Agency
  • Rent-a-Captive

Typical Coverages Within These Captives:

  • Workers’ Compensation
  • General Liability
  • Auto Liability and Physical Damage

Potential Benefits of Captives:

  • Unique and specific risk coverage potential
  • Greater control over costs and predictability
  • Tailor-made programs for more flexibility
  • Direct access to reinsurance, often at lower cost with small risk share
  • Stability, continuity and insulation from fluctuating or volatile markets
  • Financial benefits through reallocation of unused premiums, which can be used to:
     -  Reduce Insurance costs
     -  Protect cash flow
     -  Distribute back to shareholders 
     -  Garner potential tax advantages
     -  Use as additional revenue/investment income

Micro-Captive / Enterprise Risk Management (ERM) Captives

A micro captive is typically defined as an insurance company that qualifies under section 831(b) of the US Internal Revenue Code.  Simply put, your business creates a captive insurance company, then your business pays premiums to the captive of up to $1.2 million annually. If your business suffers a loss that is insured by the captive, the captive reimburses your company for the loss.  The premiums that your company pays to the captive are a deductible expense to your business. Additionally, these premiums are received taxfree by your captive insurance company.

Typical Coverages Within These Captives:
  • Policy Deductible & Coverage exclusions
  • Earthquake/Flood
  • Errors & Omissions
  • Contingent Business Interruption
  • Bank Deposits (in Excess of FDIC Limits)
  • Accidental Death & Disability
  • Product Recall
  • Patent Protection & Infringement
  • Cyber Liability
  • Political Risk
  • Punitive & Exemplary Damages
  • Environmental Liability 


M3 is committed to offering the best solutions to meet clients’ specific needs.  The captive firms listed below are strategic partners of M3 and available to assist with a thorough review and analysis of how a captive might work for your business. Due to our independent nature, we choose to provide objective advice on the merits of captives versus a sales approach.