Can your own captive deny your claim?
A single parent captive will not, and a shared one still applies the policy
The answer splits on structure. In a single parent captive the owner adjusts its own claims, and Queen cannot imagine an owner denying its own claim, which is why he says it definitionally provides the most coverage. In a group captive or a risk retention group, claims are claims: membership does not create cover the policy does not contain.
The single parent case is the strong one, but Queen puts a condition on it. The advantage holds where the claim was contemplated by the actuary and the policy covers it. Ownership decides who adjusts the claim; it does not conjure cover for an exposure nobody priced.
That is why he treats the drafting as the real work. The smart play with a single parent captive is to make the wording broad enough that virtually any contemplated risk for that organisation falls inside it, which is a decision taken when the policy is written rather than when the claim arrives.
Key takeaways
In a single parent captive the owner adjusts its own claims, which is why Queen says it provides the broadest coverage.
That advantage is conditional on the exposure having been contemplated by the actuary and covered by the wording.
In a group captive or risk retention group the policy terms still govern, because other members carry the cost.
Shared structures behave differently, and the reason is that other members' money is at stake. In a group captive or a risk retention group you still have to play by the rules: a claim outside the insuring agreement is declined the way it would be anywhere else.
From the conversation
Matt Queen
Captive Insurance Attorney, author of Modern Captive Insurance
“for a single parent captive, I can't imagine why you would ever deny your own claim.”
This answer begins at 48:05 of the full conversation. Watch or listen to the whole thing.
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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