We Are Experts in 831B Captives

Captive insurance companies generally insure commercial property and casualty risk for business owners, however there are exceptions, Agency captives and health insurance captives. Agency captives are usually owned by the same shareholders of an insurance agency. The agency captive is formed to insure risks of others. Unlike other insurance companies where profits go to company’s bottom line. Agency captive underwriting profit remains an asset benefiting the owners. While Agency captive formation increases during hard insurance markets, which is when the number of insurers decrease and insurance rates increase. Agency captives also do well during soft markets.

Captives are a good business decision when a business practices good risk management and proactively manages risk. Proactive risk management, means that the business finds ways to prevent insurance claims as well as mitigating the severity of claims.

When claims occur, the proactive business reviews what happened and revises their risk management procedures accordingly. Not all insurance claims are avoidable, however reducing the severity of the loss can be accomplished. A simple risk mitigation strategy that is now backed by state laws, contributed to stable Medical Malpractice premiums.

Prior to the new millennium, Physicians were trained not to admit medical mistakes nor apologize to the patient or patient’s family under any circumstances. The rationale was that by a physician acknowledging their mistake, the severity of the claim would go up significantly.

In retrospect, by Physicians not apologizing or acknowledging their mistakes, losses were higher than when physicians acknowledged their mistake and apologized for their mistake.

Fortunately, the new millennium now encourages physicians to apologize for their mistake without fear of reprisal due to new laws. It is ironic how a simple apology can reduce the size of a malpractice claim.

Consequently, captives would not usually be a good business decision for a business who consistently experience poor claims history, although there are always exceptions to this rule. For example, if a business eliminates a product or service that lead to a long history of claims, a captive could make sense. Businesses who take risk management actions which lead to a significant reduction in claims over a significant amount of time should also consider captives.

831b Captives are insurance companies owned by small to medium sized businesses with annual revenues of $1,000,000 to $250,000,000 to insure their own risk while enjoying the benefits of owning an insurance company. Benefits of captive insurance include:

1. The ability to design policy terms and coverage to the specific needs of its owner and insure otherwise uninsurable risk.
2. Reduced reliance on the standard commercial insurance market as well as excess and surplus lines insurance market.

3. The ability to cover commercial insurance policy exclusions.

4. Retention of insurance company underwriting profits and investment income.

5. The ability to structure risk retention according to the captive owner’s needs.

6. Potentially covering risk in a tax efficient manner.

Captive Back Office Support

Protected Cells

Protected Cells enable multiple business owners to share a core while keeping each businesses’ assets and liabilities protected.

831 A Captives

Captive Insurance

Captives are time tested risk management solution. Captive insurance companies enable a business to form its’ own licensed property and casualty insurance company, to insure its’ own risk. Frequently captive insurance policies integrate well with commercial insurance policies which creates the perfect policy.

Pure Captives

831B Captives

831B Captives – Also known as Micro Captives which are good business risk solutions for company’s grossing $1,000,000 or more annual revenues if properly structured.

If you already have a captive or are a captive manager, we can handle your back-office


831B Captives Frequently Asked Questions

The IRS just announced 12 new audit teams dedicated to auditing captives. Why take the risk of audit for limited benefits?2020-03-21T17:08:53+00:00

While it is true that 12 new audit teams were recently created, these teams are not necessarily devoted to auditing captives.  When captives are created for the right reason and managed properly, the likelihood of an unfavorable captive audit is quite low.

Since my business rarely has insurance claims and when we do claims are small. Instead of forming a Captive, I am going to set aside money and self-insure. Aren’t Captives just self-insurance anyway?2020-03-21T17:08:43+00:00

Captives are licensed property and casualty insurance companies and not the same as self-insurance. While self-insurance could potentially cover certain risk, it lacks tax efficiency and is easily depleted.  Instead captives can turn risk into profit as whether a business  while having protection for risk that exists whether a business owner buys insurance or not the risk is still there.

My insurance agent has insured me for 20 years and informs me there are no significant exclusions. They perform extensive reviews of my risk prior to my policies renewing. What are the supposed exclusions in my policies?2020-03-21T17:08:36+00:00

The most common insurance exclusions in commercial insurance policies relate to regulatory changes, regulatory audits and reputation expense.  It is hard to know what your agent meant when they said there were no significant exclusions in your policies since all insurance policies have exclusions. Captives have far fewer exclusions than traditional business policies, resulting in broader captive coverages.

I hate paying insurance premiums. What is the reason that I would want to pay more premium?2020-03-21T17:08:29+00:00

There are risks every business owner faces, whether insured or not, the risk remains. Captives offer the owner the opportunity to buy insurance  that is not available anywhere else in the commercial insurance market as well as create a profit center.

“Jeremy Colombik from MSI and 831BCaptives is a highly qualified professional that can improve your business’s financial goals with specific revenue enhancement strategies. He takes a hands on approach with financial concepts designed for your situation. He takes you through every step so you understand what is next and why each phase of the process is important. His work is an outstanding example of delivering a complete package that produces great results. His follow up is timely and is available after the sale, which I truly appreciate.”

- Paul J Madson (President/CEO of Private Corporations Experienced Financial Strategist)

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831B Captive insurance company owners typically have two choices to manage their insurance company. The first way is a “do it yourself” solution. This is where a Captive owner creates their own team to manage their captive. For most Captive owners, this task is easier said than done. While it might be tempting to use any Attorney and CPA to manage a captive, the consequences are too great. It is necessary to find professionals who are knowledgeable about Captives, not an easy task and it is possible these professionals are so busy, they have no room to add new clients. The second way to manage an insurance company is by hiring a Captive Manager.

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