Captive Program
Chapman can explore the merits of employing the captive insurance concept to manage and control your insurance risk.

A captive is essentially an insurance company that specializes in insuring a specific risk, industry or line of insurance. Captives are formed to allow the insured to share in the underwriting profit and investment income. They are usually monitored by a risk manager or financial officer at the parent company. Most are managed by a captive insurance management company, located within the jurisdiction of their domicile. For every dollar of premium paid, a specific amount is used to cover expenses. The remaining premium dollar is set aside to pay claims (loss fund). After all claims are settled and closed, whatever is remaining is underwriting profit and is distributed to the insured.

A "Rent-a-Captive" allows an organization to obtain the benefits that captives provide without the financial commitments that captives require. This concept was initiated to provide the services of a captive insurance company without the investment and administrative costs associated with establishing a standalone captive insurer. RAC participants "rent" the core capital, surplus, license and legal structure of the RAC facility.

In addition to specific reinsurance, the captive purchases "aggregate" reinsurance up to the statutory limit, which protects the insured in the event that all claims in one year total over a certain amount. The amount at which the aggregate reinsurance applies or attaches is expressed as a percentage of the written premium.

The benefit of captive programs comes in the potential to share in the underwriting and investment income. In addition, captives provide better control of risk management, insurance costs, loss control and claims handling services as well as access to specialized coverages.