How Section 831(b) Micro-Captive Insurance Works
A Section 831(b) micro-captive is a small insurance company formed by a business owner or a group of related businesses to insure defined operating risks. This guide explains how a captive may fill gaps in traditional coverage, customize policy terms, build insurance reserves, and potentially receive tax treatment available under Section 831(b) when properly structured.
The guide also outlines how captive arrangements operate, compares captive and traditional insurance, and identifies business profiles that may or may not be appropriate. These structures require genuine insurance risk, actuarially supported premiums, claims administration, risk distribution, regulatory compliance, and ongoing professional oversight. Review the full guide with qualified legal, actuarial, tax, and insurance professionals.
