What is required for a captive insurance company?

A captive insurance company is created primarily to provide insurance to its parent company or group of companies. For such a company to operate legally, it must submit an operational plan to the regulatory authorities. This plan typically outlines the intended operations, financial projections, and risk management strategies. It is essential for ensuring that the captive operates within the framework set forth by regulatory agencies and meets the necessary legal requirements. By filing an operational plan, the captive demonstrates its compliance and the viability of its business model.

The other options do not capture the regulatory requirements essential to establishing and operating a captive insurance company. A basic operating license may be necessary, but it does not encompass the detailed operational guidelines needed. A guarantee of annual profit is unrealistic in the insurance sector, where risks and underwriting outcomes vary. Lastly, while partnerships with admitted insurers may occur in some captive arrangements, they are not a requirement for the formation or operation of a captive insurance company.