A captive insurance company is a subsidiary established by one or more parent companies to provide insurance coverage to its owners. It's a form of self-insurance where the insurer is owned wholly by the insured.

Captive insurance can offer cost savings, improved risk management, and greater control over insurance policies for Canadian companies. It allows companies to customize their coverage to fit specific needs and potentially retain underwriting profits.

Setting up a captive in Canada requires compliance with federal and provincial regulations. This includes obtaining a license, meeting capital and solvency requirements, and adhering to ongoing reporting and governance standards.

Unlike traditional insurance, where risks are transferred to a third-party insurer, a captive insurance company allows a business to retain and manage its own risks. This can lead to more direct control over claims, premiums, and risk management strategies.

Captives can insure a wide range of risks, including property damage, liability, business interruption, and employee benefits. The flexibility of captives allows for coverage of unique or specific risks that may not be easily insured through the traditional market.