At first sight, the phrase Captive Solutions may seem a little misleading. It is because of the fact that most people do not know how captive insurance operates. It has nothing to do with being taken captive like a rogue prisoner or a wild animal. In fact the only reason the term captive insurance came to be used can be attributed to mining and the so called captive mine shafts that the mining company had exclusive rights to. The word in itself is negative but it has been adopted by many over the years.
For the purpose of taking advantage of the lower taxes or even zero taxes Captives were created by expatriates that were operating off shore. It is basically a subsidiary company that is created by a mother company to take care of all of the mother companies insurance requirements. In such cases, the captive has taken complete control of the insurance business eliminating the need to utilize insurance brokers and / or underwriters and the captive becomes free to dispense monies whenever it feels like doing so.
Aside from the benefits listed above, Captive Solutions are companies that have been set up by mother companies that operate risky businesses that do not want to pay extraordinary premiums to an insurance company or underwriter. Companies like mining companies and even NASA prefer to simply just create their own insurance companies where they can decide what the premiums are to be. Within certain reason due to the fact that the subsidiary company needs to make a profit, too.