Captive Insurance Advisor Partnerships

As a CPA, insurance broker, financial advisor or risk management consultant, talking to your clients about forming their own captive insurance company will solidify your business relationships, promote client retention and encourage referrals.

The increased adoption of captive planning comes in part due to limitations in commercial insurance coverage. Commercial insurance often carries exclusions, or “gaps” in coverage, leaving business owners on the hook to pay for losses out-of-pocket. Captives fill these insurance gaps with custom-designed coverages, which kick in when commercial coverages fall short. In addition to the insurance benefits of captives, financial benefits may also be available.

Your clients are likely seeking a solution that can help propel their organizations forward. Positioning yourself as a knowledgeable captive insurance advisor will undoubtedly give you a competitive edge relative to other advisors.

Watch Now: The Role of Advisors in Captive Planning

By definition, a “captive” is an insurance company that has been specifically formed to insure the risks of an affiliated business. Captives are fast-becoming one of the most sought after risk funding strategies for the mid-market. In fact, over NUM_GLOBAL_CAPTIVES are currently in operation.

Under Section 831(b) of the Internal Revenue Code, these financial benefits may include dividends, secured loans from the captive to their operating company, and a 0% Federal income tax rate on the captive’s underwriting profits. Clients who form captives under this election experience better financial and operational efficiency. The insurance needs should always be the motivating factor for captive planning, over and above any financial gains.

Ultimately, captive insurance companies are a powerful risk management strategy, which may prove beneficial for your mid-market clients. Captive insurance coverages serve as supplemental risk funding, helping to keep businesses resilient in the event of a loss.

Bringing Value to Your Clients

captive-insurance-advisorsWhen you’re working with mid-market clients, questions surrounding risk management, tax planning, and wealth transfer certainly come up. You may have some traditional financial planning strategies up your sleeve that you want to bring to the table. However, it’s likely your clients have already been advised on “status quo” financial strategies, such as ETFs, mutual funds, stocks, property investments, and IRAs.

In contrast, clients may not be fully aware of how captive insurance for businesses can spark growth and financial resilience. Captives, by way of the 831(b) election provide both comprehensive risk coverage and quantifiable financial benefits.

Most mid-sized business owners who are in-the-know are attracted to the lower costs of owning a captive in contrast to opting into a more conventional risk management option. The potential asset protection benefits combined with Federal tax incentives promote ongoing financial efficiency. Business owners will be able to use their captive’s underwriting profits as investment income. They can potentially use their capital to purchase needed equipment, pay for repairs, buy real estate, and more.

Ultimately, your unique value depends on the solutions you provide. Discussing the comprehensive risk coverage and financial benefits of captive planning with your clients can bring real value to your business relationship, and position you as a trusted advisor.

Working with Capstone

CPAs, insurance professionals, and other advisors are invited to work collaboratively with Capstone Associated Services, Ltd. to offer captive insurance planning to their clients. Capstone’s in-house team of professionals will consult with client advisors, providing insight into the captive formation and management process.

Important Facts:

  • As a trusted advisor, you’ll remain a key point of contact for your clients, and will generate additional billable hours as you consult with them on captives.
  • You’ll have a team of tax and insurance professionals on your side as well as a legal team that will help with the formation and management of captives for your clients.
  • After you speak with your clients, we will speak with them directly and conduct a feasibility study to determine eligibility. Ultimately, we’ll work together to help determine whether a captive insurance company is right for your clients.
  • We’ll always keep you up-to-date on all new captive insurance-related developments.
  •  Our team will support your clients throughout the life of the captive.

The ideal captive insurance client is a business owner or group of owners with a substantial operating business that has meaningful uninsured or underinsured risks. The operating business would need to have a minimum of $2 million in pre-tax profits before partner distributions, bonuses, and other forms of compensation.

More About Capstone

Capstone Associated Services, Ltd. is a captive insurance management company providing comprehensive insurance, accounting, and administrative support services for captive insurance companies. It is the most comprehensive captive insurance planning available.

Capstone is a standout in the industry with over 25 years in operation. Unlike most other captive managers, the team has the expertise to design, implement, and manage your clients’ captive companies and provide full support. Capstone's staff of professionals includes CPCUs (Chartered Property & Casualty Underwriters), insurance experts, accountants, and administrators.

Capstone has successfully formed over 200 captives, offering an award-winning, attorney-led captive planning program that is unmatched in the industry. Capstone also collaborates with CPAs and other financial advisors on captive planning for their clients.

If you have a mid-market client that you believe would be a good candidate for a captive, please contact us for a free consultation at 713.800.0550 or fill out our form. We’re looking forward to connecting with you.

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