The Ohio legislation authorizes three types of captive insurance companies, in addition to risk retention groups:
- A pure captive that insures only the risks of its parent or affiliated companies of its parent.
- An incorporated protected cell captive insurance company that is a part of another captive insurance company and has a separate legal identity from the captive insurance company of which it is a part.
- A special purpose financial captive insurance company that assumes life insurance risks pursuant to a special purpose financial captive insurance contract with its parent or affiliated entity that is an insurer domiciled in the state of Ohio.
The following entities are good candidates for a captive insurance program:
- financial stability
- good spread of risk with predictable losses
- good loss history
- good risk management practices
- the ability to finance its own exposure
- long-term commitment from senior management
- unusual or hard to place risks
- primary purpose must be for insurance