Custom Captive Insurance: Take Control of Your Risk and Your Capital

Stop trading dollars with commercial insurers.

The Evolution of Risk Management

For decades, middle-market businesses have been trapped in a reactive cycle with the traditional commercial insurance market. You pay premiums, you hope for the best, and if you have a “good year” with low claims, the insurance carrier keeps the profit. At Ingram Insurance, we believe that if you are doing the hard work of managing your risks, you—not a third-party carrier—should reap the financial rewards.

Captive insurance is no longer a tool reserved for the Fortune 500. It is a sophisticated financial structure that allows successful businesses to form their own insurance company to provide coverage to the parent organization or its affiliates. This page serves as a comprehensive resource to help you understand how a captive works, the financial mechanics behind it, and why it is the superior choice for high-performing companies.

The Fundamental “Why”: Solving the Flaws of the Commercial Market

To understand the value of a captive, one must first identify the systemic flaws in the standard insurance market that Ingram Insurance seeks to help you avoid:

1. Arbitrary Pricing: Commercial rates are often dictated by the “law of large numbers.” If a hurricane hits the coast or a massive class-action lawsuit impacts your industry, your premiums may skyrocket even if your specific business had zero losses.
2. Inflexible Coverage: Standard ISO (Insurance Services Office) forms are built for the masses. They often contain “silent” exclusions for emerging risks like cyber extortion, supply chain volatility, or specific professional liabilities that are core to your operations.
3. The “Sunk Cost” Trap: In the traditional model, premium is an expense. In a captive model, premium is an investment in your own subsidiary.

How the Ingram Captive Model Operates

A captive insurance company is a genuine, licensed insurance entity. It must follow regulatory requirements, maintain reserves, and pay claims. However, because you own the entity, the “profit” (the difference between premiums paid in and claims/expenses paid out) stays within your corporate ecosystem.

The Financial Advantage: Beyond Just “Insurance”

The beauty of a captive lies in its ability to enhance a company’s balance sheet. When Ingram Insurance implements a captive solution, we focus on three financial pillars:

1. Underwriting Profit
   In a traditional policy, the “Combined Ratio” includes the carrier’s profit margin. By owning the company, you capture that margin. Over a 5-to-10-year horizon, this accumulated underwriting profit can become a significant capital reserve that can be loaned back to the parent company or used to fund further growth.
2. Investment Income
   While your premiums are sitting in reserve to pay future claims, that capital isn’t just sitting idle. The captive can invest these funds. Under the guidance of Ingram Insurance and your financial advisors, the investment income generated belongs to the captive, further increasing the surplus.
3. Tax Efficiency (Section 831(b))
   Small captives (often called “Micro-Captives”) may elect to be taxed only on their investment income, not on their premium income, provided they meet specific IRS requirements regarding risk distribution and risk shifting. This can provide a powerful tool for building loss reserves more efficiently than a standard self-insurance pool.

Is Your Business a Candidate?

Captive insurance is a “reward” for businesses that have mastered their operations. We generally look for clients who meet the following criteria:

The Ingram Insurance Difference

Many brokers “dabble” in captives. At Ingram, we treat it as a core discipline. We don’t just sell you a policy; we help you build a company. Our team coordinates the “Captive Ecosystem,” including: