Captive vs. Exclusive Insurance
In the United States, the insurance industry consists of a highly variegated mixture of companies and organizations that operate in a myriad of ways and offer many different types of coverage for different types of peril. Two words that those in the insurance industry often use are "captive" and "exclusive," which can describe various types of policies, organizations and professionals.
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Captive Insurance Company
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Businesses often require insurance to cover their exposure to risk in carrying out their business operations. For instance, a business may pay premiums to protect its real property or inventory from fire, flood or crime. A business may also pay premiums to protect it from legal liabilities in case a client, patron, employee or affiliate were to file a civil suit against the business. Businesses may gain such insurance coverage by purchasing it from an insurance company. In some cases, though, businesses may choose to create their own insurance companies for the express purpose of protecting the liabilities of their subsidiaries, and not for the purpose of selling insurance to other parties. Such companies are called captive insurance companies.
Group Captive
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While a business may decide that it wants to invest in captive insurance instead of paying a third-party company for insurance, it may lack the resources necessary to start its own stable insurance company. If this is the case, it may elect to join with a group of companies to create a single captive insurance company to cover all of their liabilities. Such a company is a group captive insurance company.
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Exclusive Agent
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Insurance agents are sales professionals who specialize in finding and contacting insurance prospects, receiving commissions whenever those people sign up for insurance policies and continue to make premium payments. Some insurance agents, particularly those who have their own independent agencies, sell insurance for multiple companies, helping their prospects to find the best rates available. Other insurance agents are exclusive agents, meaning that they have a contract with a particular insurance agency in which they agree not to take business to any of their competitors unless they have already rejected coverage.
Exclusive Provider Organization
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In health insurance, an exclusive provider organization is a network that incorporates agreements between specific insurance companies and healthcare providers. Under such arrangements, insurance companies require those who hold their policies to go only to the providers in the organization, and the providers in the organization agree to certain price limitations when they provide their services to those insurance companies' policyholders.
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