Captive Insurance Company
Categories: Insurance, Company Management
Remember that insurance company that just...captivated you? Yeah, neither can we. Luckily, that’s not what “captive insurance company” means (also, no, there are no hostages involved).
A captive insurance company is a wholly owned subsidiary company that sells insurance products for its parent company.
Really large companies are good at making money. They’re also good at mitigating risk. So, they think, why not make our own insurance company? This lets them protect themselves just as they’d like for their particular risks in their particular industry. It's also another way for them to make money.
So that’s what they do: they make captive insurance companies. The “wholly owned subsidiary” means they’re totally owned by the parent company. They are a child company. Just like you are forever a captive of your parents, captive insurance companies are forever a captive of their parent company. They just don't get to move out of the house when they turn eighteen.
