History of Captive Insurance

History of Captive Insurance

The insurance industry is massive and can be easily overwhelming. With so many different facets and fields of business under the insurance umbrella, it can be hard to navigate for various needs. For example, the niche of captive insurance might not be familiar to many people outside of the insurance world, but it has an important place nonetheless. Explore this breakdown of the captive insurance industry


First, it’s important to understand captive insurance itself. Essentially, a captive insurer is a subsidiary company that is actually owned by the people it was designed to insure. It is designed specifically to protect those it was created to insure. One of the biggest benefits of captive insurance is that the coverage and policies are so personal that the service is tough to beat. Similarly, this can often decrease costs typically associated with insurance and allow for greater control if and when claims ultimately arise. 


Captive insurance is actually a relatively modern creation. Captive insurance was legally confirmed and incentivized in the late 1980s to assist a struggling sector of the small business world. However, the concept itself is much older than its current iteration. In fact, some say this practice can be traced in its earliest forms back to 500 years ago in the trading world in Europe. Much, an American risk management company coined the term “captive” in the late 1950s. By the next decade, hundreds of other small companies had jumped into the practice. Once again, this can be traced back to the trading world. There were many desirable products coming in and out of Bermuda, but specific regulations from the United States were making it difficult to operate in trade with Bermuda. The captive insurance was designed almost as a loophole and ending up with some staying power. Now, many companies continue to use captive insurance to the fullest. 

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