Rentacaptive

Rentacaptive is a term used to describe a business practice where a company establishes or acquires an insurance subsidiary, often called a captive insurance company, and then makes its capacity available to other unrelated businesses for a fee. This allows the unrelated businesses to access insurance coverage that might otherwise be unavailable or prohibitively expensive in the traditional insurance market. The "rentacaptive" provider manages the captive's operations, including underwriting, claims handling, and regulatory compliance, in exchange for a fee and potentially a share of the underwriting profit.

The primary benefit for the "renter" of the captive is the ability to obtain tailored insurance solutions, often for hard-to-insure risks, and potentially benefit from improved risk management and cost savings. The provider of the rentacaptive service can generate revenue from fees and investment income, and may also benefit from increased scale and diversification of risk within their captive structure. However, there are regulatory considerations, as the "renter" is essentially participating in a form of self-insurance, and regulatory bodies scrutinize these arrangements to ensure financial solvency and consumer protection. These structures can be complex and require careful legal and actuarial advice.