The benefits of a captive insurance company include tax advantages, a better ability to negotiate premiums, control claims settlements, and provide better incentives for return-to-work programs that can help employees after suffering an injury. These groups work like traditional insurers, offering captive workers compensation among other plans.

Types of Workers Comp

When using a captive insurance company, there are often two types of workers’ compensation plans. In a pure captive or single owner captive, the company has the power over the operation, controlling investment activities and paying out claims. In a rent-a-captive, a broker-run captive provides the worker’s comp coverage, which often makes this a much cheaper and more popular option for captives.

Workers Comp Coverage

Even though the coverage is coming through a captive, a worker’s comp policy still addresses the fallout of employee injuries or illnesses that occur while on the job. There state mandates that set the minimum requirements for coverage, but the federal government has also established the criteria for the businesses that must offer the coverage. For an employee to receive coverage, the injury or illness has to be connected to their employment of job duties. The coverage usually takes care of the financial costs associated with medical expenses, rehab, therapies, and death or dismemberment.

Check with your state requirements for the coverage your business will need, but consider working with a captive insurance company for a more affordable option.