Writing Only Uninsured Risk

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Captive legislation was created on a federal level to allow businesses to escape the market cycles of the insurance industry. That was the purpose and if used correctly, there is nothing better. All businesses have risk they have insured and some risk they have self-insurance (either consciously or unconsciously). Many captives are designed to simply cover uninsured risk. Some promoters will go into a business and ask how large of a deduction they would like and they try to come up with risks and polices to validate the (usually) $1,200,000 deduction. The issue with this type of planning is that it ignores the reasonableness test of the insurance.