What is a Protected Cell Captive Insurance Company?

Insurance comes in many kinds, but they only have one goal, which is to protect the insured from their finances by providing them aid when they need to or after maturity of their insurance premium. Insurances are created by companies and caters to everyone who is qualified. However, some companies prefer to build their own insurance and are called captive insurance. Captive insurance are insurances that protect the owner of the company as well as extend to their shareholders or board of directors. One of the captive insurance companies is called protected cell captive insurance company is a corporate structure insurance that is considered a single entity but has separate liabilities and assets. Each separation is called a cell. 

How Does Protected Cell Captive Works?

It is governed by a single board of directors .Each Cell is managed by committees that are still directed by the board of directors.  All cells are required to follow the rules written in the articles of incorporation in annual taxes filed as one entity. But when it comes to   each cell’s liabilities and assets they have their own accounts. 

Advantages of Protected Cell Captive Insurance

Start up Cost are Reduced

When building up an insurance company there is a certain amount that is required to be qualified to do so. However, with protected cell captive insurance start up capital is smaller since each cell will provide their own capital. Having your own insurance company without bringing out a large capital is an advantage on the part of each cell owner. 

Improve Cash Flow 

In a common insurance company cash flow is complicated with protected cell captive   cash flow can be easily followed since each cell has its own financial management which makes it easier for the whole entity to manage.

Lesser Ongoing Cost 

Since it is managed by the same team of the insured, extra man power is not necessary. The board of directors can act as the same board directors on the protected cell captive insurance they created.  With this kind of setup there will be less operating expense. 

Easier Risk Management

Risk can easily be detected just in case losses are happening since each cell runs individually. In and out of money can easily be traced and the committee can easily see the problem and can prevent it from incurring more losses or can even prevent it from happening. 

How to Build Protected Cell Captive Insurance

Do Feasibility Study

Approach groups that have the same industry as you, check on how protected cell captive insurance has worked on their company. Being able to know if this can really give benefit to your company will help in finalizing your decision. Feasibility is also one of the requirements when applying for captive insurance, so doing this is a necessity. 

Get a Captive Manager 

Although you will not be needing a lot of manpower and are not required to have a captive manager. Getting one can aid you in creating, running and getting a successful result for your captive insurance. The knowledge of an experienced insurance manager can serve as your asset in making your protected cell captive insurance successful. 

Selecting Domicile 

Domicile contains the details on your capitalization, investment restrictions, income and local taxes. You have to be able to match this to your company’s needs. Create a detailed one and include all the necessary rules that you want to have in your premiums , since it is not easy to amend domicile once approved. 

Submitting Application 

Finalized everything including legalities and credentials for faster approval. Your captive manager can assist you with this and go through it before submitting it. 

Having your own  protected cell captive insurance company can help your business grow by being able to   your own cash flow and lessen the risk losses compared when getting insurances from other companies. It takes time to get familiar with how protected cell captive insurance works but it will pay off once you can see the benefits your company can have by creating one. Insurances are needed in every business whatever industry it belongs to, so why buy premiums from others if you can make your own insurance company. Make it happen and start it now.