--- title: 8 Reasons Why You Should Form a Captive - RMC Group description: Many business owners have formed a captive insurance company and realized significant benefits. Click here to read the 8 reasons why. image: https://rmcgp.com/hubfs/blog22.jpg --- [ ← Back to Blog ](https://rmcgp.com/blog) # 8 Reasons Why You Should Form a Captive Written By RMC Group Published on: July 27, 2017 **Categories:** Business Insurance,Captive Insurance ![8 Reasons Why You Should Form a Captive](https://rmcgp.com/hubfs/blog22.jpg) Many business owners have formed a [captive insurance](https://rmcgp.com/captive-insurance/) company and realized significant benefits.  However, the decision whether to form a captive is often clouded by misconceptions and a failure to recognize the advantages of owning your own insurance company. A captive insurance company is an excellent risk management tool.  In addition, it can be a profitable business and can offer significant benefits to the owner(s) and insured(s). Here are 8 reasons to form a captive insurance company: 1. Coverage Control: A captive insurance company enables a business owner to better manage insurance risk.  By establishing a captive, a business owner is able to tailor coverage to the insurance risks that are specific to the business.  In addition, the business is not limited to coverages that a commercial insurer is willing to offer. 2. Uninsurable Risks: A captive insurance company can provide coverage for insurance risks that are unavailable or prohibitively expensive in the commercial market. 3. Cost Reduction: A captive insurance company can reduce insurance expenses by eliminating commercial insurance company costs, such as commissions, overhead expenses, and profits. 4. Underwriting Profits: A captive insurance company can be a source of profit.  Premiums paid to the captive in excess of the claims paid by the captive are retained by the captive as net profit. 5. Rate Control: A captive insurance company provides greater control over a business’s insurance costs.  Premiums paid to a captive are based on the claims experience of the associated business. 6. Reinsurance Access: A captive insurance company can provide access to the reinsurance market, which may result in better coverage at a lower cost, when compared to the commercial insurance market. 7. Investment Income: By forming a captive insurance company, a business owner can control the investment of unearned premiums and reserves, instead of paying these amounts to an unrelated commercial insurance company. 8. Claims Control: By forming a captive insurance company, a business owner gains control over the claims adjudication and payment process, which can result in a more efficient and expeditious process. 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