Rent-a-captive
A rent-a-Captive (from english to rent "rent" or "lease" and for captive "trapped" on or "bound") is a suitable for medium-sized companies model for self-insurance .
Properties and special features
The company rents the existing infrastructure for self- insurance from a primary insurer or reinsurer . Internally, the direct insurer or reinsurer maintains an account for the insured company - the self-insurer - to which the premiums and the investment income generated are credited and at the same time the management fees and any claims payments are debited.
If a profit results at the end of the term of a Rent-a-Captive contract, this is returned to the self-insurer's business cycle. If, on the other hand, the account shows a negative balance, the self-insurer must make an additional payment.
Rent-a-captive solutions are therefore a flexible financing instrument on a contractual basis. They allow the company to participate directly in its risk development with limited costs.