Risk Structures - How to Choose

There are a number of captive insurance structures to choose from: pure, protected cell, series limited liability company, risk retention group, reciprocal risk retention group, etc.-which appear to make the choice harder than it really is. At its roots a captive is a legal entity formed in a state to operate as an insurance company. Captives may be formed in any state or country (also known as a "domicile") that has passed legislation to allow for the creation of captive insurance companies. Much like state taxation, captive legislation is unique to each domicile. Most domiciles allow for the following types of captive insurance companies or some form thereof:

Pure                                                                              Protected Cell Company ("PCC")

831(B)                                                                           Incorporated Cell Company ("ICC")

Series Limited Liability Company ("Series LLC")    Special Purpose Financial Vehicle ("SPFC")

Risk Retention Group ("RRG")                                  Reciprocal Risk Retention Group ("Reciprocal RRG")

Purchasing Groups
In determining the type of structure that best suits you, we focus on your needs. Do you need access to the reinsurance markets? Do you need to provide proof of insurance in multiple states? Do you need to segregate exposures?

We also work with your company's operational managers, risk managers, brokers, tax consultants, and attorneys to ensure that the type of captive fulfills everyone's needs. Unfortunately, there are relatively few examples where one standard, cookie-cutter structure meets everyone's needs.