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About Captives
An insurance company
all your own.
For many years, qualified medical groups, hospitals, and professional groups have used captive insurance companies to gain greater control over their insurance risks. Utilizing the captive structure, the captive’s owners are able to insure their own risk exposure, either through direct insurance or through the use of reinsurance treaties with their primary insurance carriers.
By insuring their own risk, organizations with particularly good experience may be able to change what is a straight expense item (insurance premiums) into a long-term vehicle for financial growth.
Assuming positive results, captive owners are able to pay premiums to their own insurance company, investing these premiums in a tax deferred manner until such time as the premiums are returned to the captive’s owners as either dividends, a stock repurchase program or a sale of the captive.
Typical captive start-up fees can range from $300,000–$600,000, depending upon the complexity of the organization, its subsequent formation activities, choice of domicile, etc. This significant start-up cost can be an impediment to many organizations that wish to start their own captive.
As an alternative, interested organizations have the ability to enter into a rent-a-captive by purchasing a segregated portfolio, or cell, in PRASEC.
For more information about PRASEC or the ownership of a segregated cell, please email us or call PSCS at 516-945-3120.