What is a rent-a-captive insurance company designed to do?

A rent-a-captive insurance company is designed to offer captive insurance benefits to smaller businesses or companies that may not have the resources to establish their own captive insurance structure. By utilizing a rent-a-captive, smaller entities can access insurance mechanisms typically available to larger corporations, benefiting from cost savings and tailored coverage without the need for substantial capital investment or administrative overhead.

This arrangement allows these smaller companies to participate in the advantages of a captive insurance program, including risk management and potential tax benefits, while paying a fee for the use of the rent-a-captive structure operated by a larger institution. This model plays an essential role in making sophisticated risk management tools accessible to a broader range of businesses.