What is Cell Captive and How Does It Work?

Protected Cell Captive Programs | Captive Cell Insurance Solutions

Insurance comes in many forms. It varies according to people’s needs. Whatever insurance that is, they only have one goal which is to secure the financial status of an individual or a company for their future needs. One type of insurance is captive cell insurance.

What is Cell Captive Insurance?

This type of insurance consists of a group of cells  in one core. Each cell has their own assets and liabilities. They have one set of board directors as a core, or they can also opt to have their own board directors for each cell. They are one entity when it comes to getting registered but runs their finances separately as a cell. This insurance was created to protect the interests of a company by building their own insurance, it is also called self-insurance.

Types Cell Captive Insurance

Protected Cell Captive

For this type of insurance it can be built by several individuals acting as one body but has their own cells ,where they can build their one asset for their self insurance. Everything is managed per cell such as separate liabilities and assets.  Since cell captives are self insurance companies can be able to insure   according to the company’s need.

Advantages of Protected Cell Captive

  • Losses of one cell doesn’t affect the others.
  • Assets of each cell can be protected from creditors of other cells.
  • Risk management is done per cell, therefore easier to manage.

Single Parent Captive

This type of captive insurance is its own by a single company and the main goal is to insure its own company without getting too much risk.

Group Captive

This type of insurance is built by several companies that have the same business interest and have the goal to have their own insurance among themselves. Each cell represents one company.

Rent-A Captive

In this type of captive, the owner or management of captive insurance allows other companies to rent their insurance in exchange for a certain fee. The owner of the captive insurance provides underwriting, claims management, reinsurance, financial expertise and rating to unrelated organizations. Cell captive arrangements are agreed upon by both parties.

How Does Cell Captive Insurance Work?

 Captive insurances are like any other insurance they collect premiums, domiciles are stated, they pay claims to their insured, and they have policies made.  The only difference is they are focused on insuring their own company. In simple terms they are extensions of the owner company.

Advantages of Cell Captive 

Reduced Risk Management

In every business there will always be a risk , but being able to monitor where the money goes in your insurance money can be a better way of regulating its risk. Premiums are being invested in many kinds of markets , by having captive cell insurance you can do more research on the market where you are putting your money.

Advantages on Tax

Whenever an insurance is built  they are required to pay taxes to their premiums and this taxes benefits the insurance company.However, in captive insurance the tax you are paying for your insurance is directed to your company since you own it. Instead of letting other insurance companies own from your payments why not make your own insurance company.

Premiums

Premium amounts should be patterned to other insurance companies , since overpricing can lead to tax evasion cases. Just like any other insurance claimants are paid the money they invested on their premium whether the insurance is gaining or losing.

Profits

Insurances percentage on dividends are paid to their policy owners once the company earns profits. Profits are tax exempted.

Cell captive insurances are perfect to protect your company’s assets by being able to monitor every cash flow made on your insurances. Domiciles can also be set according to the needs of the company unlike other insurances where packages are too general and you can not change policy and restrictions written in it. By having your own domicile you can find details that are helpful and applicable to your company’s interest. If you have a company and planning to get an insurance cell captive can be the best option, you will still have to undergo the process of applying for an insurance company but once approved you can benefit from it.

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