mutual insurance

The Difference Between Captive Insurance and Mutual Insurance

The Difference Between Captive Insurance and Mutual Insurance

It can be a complicated experience to search for and find the right insurance company to meet your needs. In your research, you may come across captive insurance companies, often shortened to captives. On the surface, these companies may sound like mutual insurance companies, but there are a few differences.

Who Owns What?

The main difference between captives and mutual insurance companies lies in ownership. Captive insurance companies are fully owned and operated by their policyholders, whereas mutual insurance companies are owned by their insured parties but not controlled by them.

What Does That Mean?

When a mutual insurance policy expires, so does the insured party’s ownership in the company. On the other hand, captive insurance policyholders invest their own capital in the company. In doing so, they gain a voice to personally direct the running of the insurance company.

Why Choose Captive Insurance?

With greater investment opportunities in captives, insured parties can benefit from price stability, wider plan availability and lower costs than offered by other types of insurance companies. They also cite significant control of the company as a benefit. Captive insurance companies can provide the same traditional personal and property coverage offered by mainstream insurance companies, but with the added attractions of increased flexibility and participation in company decisions.