A micro captive is a small captive insurance company that’s taxed based on the stipulations of section 831(b) of the U.S. Tax Code — hence, their alternate designation of “831(b) captives.” Captive Resources’ (CRI) approach to these smaller captives aligns with our overall group captive concept: to provide member-owners with a true insurance mechanism that provides greater control and risk management.
Micro captives can be especially useful if your company is having trouble finding adequate or affordable coverage in traditional insurance markets. In these cases, CRI can help your company form and operate a micro captive insurance program that provides unique or specialized coverage.
Examples of the types of coverage that may be suitable for a micro captive include:
- Product recall
- Cyber liability
- Defense costs
- Loss of key employee
Forming a micro captive can improve a business’s risk management program and also allow for better cash forecasting, as payments for actuarially determined premiums can be included in the budgeting process. It is an opportunity to step into the world of alternative risk management while providing the business with an individualized risk management plan.
At CRI, we bring our years of experience in the captive industry and our knowledge of best practices to help companies form and operate legitimate 831(b) captives that comply with all IRS regulations.
Micro Captives: Building a Strong Foundation for Success
In spite of continued close scrutiny from the IRS, micro captives continue to be a viable and legitimate option to manage risk. …