Jill Belvin

In the US, a captive is a licensed insurer owned by the business, letting premiums fund its subsidiary, pay claims, and keep underwriting profit.
Owners can view captives as disciplined self-insurance that builds reserves they control, but tax authorities may challenge structures lacking real risk transfer or purpose.
Best-fit US businesses usually spend >$1M yearly on insurance, post better-than-avg. losses, have stable cash flow, and take a long-term view on risk.
Potential gains include keeping underwriting profit, lowering long-term risk costs, gaining coverage control, smoothing pricing swings, and building investable reserves and surplus.
For well-run US businesses, a captive can turn insurance into a strategic asset, but the shift needs capital, discipline, and a long-term mindset.

Is Captive Insurance Right for Your Business?

The federal program was not expected to disappear. Its retirement reserve could deplete by Q4 2032, while the disability reserve was expected to last.
Without congressional action, beneficiaries were projected to receive ~78% of scheduled payments after depletion, implying a minimum ~22% reduction rather than a complete loss.
The reserve timeline shifted earlier as retirements grew, life expectancies stayed longer, workforce growth slowed, and more wages rose above the maximum taxable cap.
Congress could raise tax revenue, trim expenses, or combine retirement and disability reserves, a temporary move that would delay depletion to 2034.
Planning steps included building other retirement income, considering a later claim age when appropriate, and stress-testing a budget against a potential ~22% cut.