Captives, a better known type of Performance Based Insurance, are becoming increasingly popular as an insurance vehicle for many companies, large and small. Approximately 30 US states have passed laws allowing captives to be formed in their jurisdictions. Vermont, which allowed the first on shore captive to be formed, now boasts approximately 600 captives. The bottom line is that captives are becoming mainstream, and the companies adopting them are often saving millions of dollars.
A captive can be defined as follows: Captive insurance is an alternative form of risk transfer (ART) and management that is becoming a more practical and popular means through which companies can protect themselves financially while having more control over how they are insured.