A captive is a wholly or part-owned, or rented enterprise designed to insure an employer’s own risks. There are between 4,000 and 5,000 in existence worldwide.
In theory, employers can cover any insurance benefit with a captive, including private medical, critical illness cover and life insurance. The potential advantages of using a captive include cost savings, tax efficiencies and more flexibility, but launching one can be a time-consuming process for employers. Usually only large multi-national companies have the capacity to use a captive. Captives can be based offshore, in tax favourable domiciles. But employers should check to see whether the law in the selected domicile allows captives to be set up for the insurance concerned.