A captive is a licensed and regulated insurance company that provides insurance to its insured – the business who purchases insurance coverage through the captive. The primary purpose of a captive is to insure the risk of the participating business, and allow the owner of the captive and/or insured business to benefit from the captive’s underwriting profit. Simply put, when you are a business owner and you need to cover insurance risk associated with your business, you either purchase insurance coverage from a commercial insurance carrier or you can establish a captive insurance company to protect your business against those risks.