Captive Insurance

Attorneys practicing in Captive Insurance

A captive insurance company is an entity formed to provide insurance coverage to its owners. A captive may also be used as the insuring vehicle to a risk-retention group, generally an entity formed to provide liability insurance to members.

Since 2001, Nelson Mullins has assisted in the formation, licensing and governance of nearly 40 captives.

Firm attorneys have experience in representing insurers of a wide variety of risks, including:

  • liability risks for emergency medicine physician groups;
  • professional and general liability risks for hospitals and hospital associations;
  • professional liability risks for nursing homes and assisted-living facilities;
  • commercial vehicle liability risks for trucking companies; and
  • legal liability risks for educators.

A captive can provide important benefits to its owners, including: obtaining coverage otherwise unavailable or unaffordable; the opportunity to participate in underwriting, pricing and other insurance management decisions; ability to stabilize insurance prices based on the loss experience of a small number of insureds; access to the reinsurance market, resulting in a lower cost for reinsurance; the ability of the captive to invest certain of its assets, which may result in additional funds to pay losses and lower premiums for policy holders; and the ability of the owners to obtain a return on investments made into the entity in the form of dividends or other distributions.

Captive insurance may be a viable alternative to traditional insurance if a client can provide the initial required capital and surplus (generally between $250,000 and $1 million, depending on the type of captive entity formed); would be able to pay premiums to the captive to cover the expenses of the captive and would provide some savings to the client in reduced premiums; and can project a sufficiently low loss experience such that the captive would be expected to build surplus over time and thereby enhance its ability to pay losses.

Attorneys assisting the Firm’s captive clients include members of the Nelson Mullins Insurance and Regulatory Law Practice Group, the Legislative and Administrative Law Practice, and the Corporate, Securities and Tax Law Practice.