How Do 831(b) Captive Insurance Companies Work?
An 831(b) Captive Insurance Companies operates as a regular insurance company but does so within the range of premium at or less than $1,200,000 per year. All other traditional insurance functions are performed by the captive. Risk is ceded to reinsurance or a risk pool, claims or risk reduction programs are implemented by the company, and when claims arise they are handled by the claims manager. The company performs all usual and customary tax accounting and actuarial work and does so as a US corporation under the 953(d) election.
• An 831(b) Captive Insurance Company operates as a regular insurance company, but does so within the range of premium at or less than $1.2 million per year. All other traditional insurance functions are performed by the captive. • Risk is ceded to reinsurance or a risk pool, claims or risk reduction programs are implemented by the company, and when claims arise they are handled by the claims manager. • The company performs all usual and customary tax accounting and actuarial work and does so as a US corporation under the 953(d) election.
