Manufacturers Turn to Captive Insurers

A captive insurer (or “captive”) is a privately held insurance company founded by the very parent company that it insures. According to Ernst & Young, captives now cover 25% of all property/casualty insurance in the United States commercial sector, and manufacturers are increasingly turning to captives to provide insurance coverage. Captives can be used for general liability, product liability, extended warranty coverages, and worker’s compensation, among other common lines. With profit margins tightening in many sectors because of rising commercial insurance premiums, trade wars, supply chain disruptions, and geopolitical risks, CFOs and risk managers use captives to finance their companies’ risks.