How widespread is captive insurance planning?
Captives are widely used both domestically and abroad. For example, A.M. Best, one of the world’s most respected information sources on the insurance industry, estimates that there are over 5000 captives worldwide. While statistics do not exist for the size of the captive insurance market, it is estimated by many professionals to be larger than the conventional insurance market. Certainly, it is very large by any standard. Nevertheless, smaller businesses use captive planning much less often than the larger companies with the typical captive sponsor being a Fortune 1000 company with tens of millions of dollars a year of premiums. Such companies can afford to cover the substantial investment in the formation and administration of a separately capitalized and regulated insurance arrangement. Mid-sized companies have a more difficult time covering the sizable captive formation and administrative costs and are faced with spreading such costs over much smaller premium volumes. To address th
