Captive insurance is a regulated insurance structure that is owned by its members rather than an external insurance carrier. It is designed to insure the risks of its owners while allowing them to retain underwriting results.

Why It Matters
In a captive structure, underwriting profits are not transferred to a third-party carrier. When losses are well managed, excess premium can be retained, invested, and returned to members over time.

Example
An established operator participates in a captive rather than purchasing a guaranteed-cost policy, allowing retained capital to accumulate when claims are lower than expected.