What is a Captive Insurer? - Insurance Navy. A Captive Insurer is a type of insurance company that is wholly owned and controlled by its insureds. Its primary purpose is to insure the risks of its owners, and its insureds are the beneficiaries of the insurance company’s profits. This type of insurance company is established by a parent group or groups with the specific objective to cover the risks to which the parent is exposed. Captive insurance companies are essentially a form of self-insurance where the insurer is owned wholly by the insured. They are typically established to meet the risk-management needs of the owners or members.
They are also used to provide coverage for unique or specific risks that traditional insurance companies may not cover or to provide additional coverage over and above what a traditional insurer would offer. Captive insurance companies can be classified into two main types: single-parent (or pure) captives and group captives.