A captive is an insurance company owned by the insured to cover their own risk, either due to market pressures such as high prices or lack of coverage, or to provide coverage not available in the commercial market.
It is a strategic risk management tool used to control the cost of insurance, and although it may not always lower costs, it does control them. Most Fortune 500 companies have a captive which provides insurance coverage, and it is becoming an increasingly popular tool in areas such as the medical field due to the increasing costs of medical malpractice.
Captives are operated under a different regulatory system than commercial insurers. Under South Carolina law every captive is required to have an annual audit. Companies considering captive insurance often seek initial consulting regarding the feasibility of a captive, undertaking the setup process and choosing the various required service providers.
The principals of Jarrard, Nowell & Russell have experience in captive audits and consultation.