A Protected Cell Captive is an alternative insurance option with benefits similar to a group or single-parent captive.
How is This Insurance Structured?
This type of coverage plan contains a core and any number of attached cells. Insurance companies set these up to provide captive facilities to their policyholders. Captive managers create them to attract prospective clients with a cost-effective alternative to a stand-alone option.
What Protections Does It Provide?
This option legally separates the assets and liabilities in each insured’s account from those in other participants’ cells. This setup shields each individual from sharing capital with other cell owners. It also protects an insured member from any legal action brought against another. Assets from one participant do not pay liabilities in another account unless both agree to do so.
What Are the Advantages of a Protected Cell Captive?
Benefits of this kind of arrangement include:
- Ease of implementation and administration
- Reduce startup costs
- Improve cash flow
- Lower prices from shared services
- Less ongoing costs
- More control over risk
- Reduce the total cost of risk when properly executed
- Gain investment income and underwriting profit
- Fund risks that might be traditionally uninsurable
- Access a less expensive reinsurance market
- Lower premium tax
Cell arrangements are convenient and easily formed with many advantages for participants.