Most people are familiar with the insurance industry through the house they own, the auto they drive, or the doctors they visit. Normally, payments are made to these companies in case something comes up which requires the services of the insurance company. However, customers of these companies are not investors in them via monthly or annual payments. Even people who own whole life policies aren’t investors in the company. However, there is an insurance industry where the insured both invest and have control in the company.
This is the captive insurance industry. In this environment, those who are insured own and control the business. The insured profit from the facets of underwriting other customers at the same time they’re financially protected should something occur. This framework differs greatly from that of a mutual insurance company. Those who invest in mutual insurance can vote on changes to the company via proxy. They do not have exclusive control like those in captive insurance.
Many captive insurance companies started during the insurance crises of the 1970s when premiums escalated to all-time highs. As the industry grew, many of those older companies, like Captive Resources, became advisors to those entering the market. As of this writing, there are over 7,000 captive insurance agencies across the U.S., up from 1,000 when the industry was born in 1980.
Three things make captive insurance different. First, the insured risk their own capital in order to see a return on investment in the form of underwritings. In this way, the industry is similar to investing in the stock market. Second, captive insurance companies work outside of the normal market. This means many of the regulations attached to larger and well-known life, auto, and home companies do not apply. Third, while their capital may be lower than more established companies, captive insurance organizations have the ability to broaden their services and stabilize their processes since they don’t follow the market.
If this is something which interests you we highly recommend to do your homework. Search the internet or media about captive insurance to see which ones are stable and provide a decent turn as opposed to those who want to scam you. In addition, review your economic situation to determine if you have enough to invest.