What retention/threshold example does the speaker give for captive claims?

Hunter NelsonOwner of Nelson Insurance Agency

Captive Insurance: Control Risk & Boost Investment .

14 May 2025 · 1 min

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Short explainer (YouTube transcript) describing how captive insurance companies operate: a captive is its own insurance company that obtains reinsurance from large insurers (examples named verbally). The captive collects premiums, invests those funds and can earn dividends like a regular insurer. The speaker explains that captives typically retain smaller losses up to a threshold (example given: $1,000,000), with reinsurance covering losses above that retention.

Questions this video answers

$1,000,000

Chapters

So how a captive insurance company works is it's going to be its own insurance company, where it's going to go get reinsurance by somebody who's a big insurance company, like cna, Chubb National, Interstate, etc, and then you're almost going to act like your own insurance company. You're going to pay in these premiums as you pay in more. You're going to get investment dollars from it. Your your money's being invested and you're going to earn dividends from it, just like a normal insurance company would. But the only difference is that you're not going to pay for these claims on the stuff that is not coming in that reinsurance will not be coming into play on. So, for example, if you join a captive, or you create your own captive, you might have a million dollar threshold. So you're going to pay for all claims under a million dollars.