You’re here because your client is interested in captive insurance. You likely want to make sure you’re guiding them toward the right people and the right structure.
Captives are a legitimate insurance model with long-term strategic benefits. But let’s be clear: who you talk to about them matters just as much as what you learn. The wrong advice can seriously damage your credibility with the client.
At Captive Coalition, we work exclusively with independent agents to help them protect and retain their best clients through the right captive strategies. Unfortunately, some agents come to us only after their client has been burned by someone who didn’t know what they were doing. Or worse, had no business talking about captives at all.
This article will show you the red flags, the right questions to ask, and the kinds of people to avoid when seeking captive guidance for your clients.
The Difference Between Getting Your Client In a Captive vs. Helping Them Succeed in One
There’s a big gap between getting your client accepted into a captive and helping them thrive as a captive owner. Some people focus on the entry requirements—pro forma numbers, structure setup, and paperwork. That’s the easy part.
What really matters is whether your client can manage risk, run a safe operation, and contribute positively to the captive over time.
If the person you’re talking to isn’t asking whether your client has low claims because they’re good at safety (not just lucky), that’s a problem.
It’s not complicated, but it does require someone who understands that captives reward discipline and risk control. If all you’re hearing is “Here’s what you need to get in,” with no mention of claims management or long-term profitability, you’re talking to someone focused on transactions, not outcomes.
Want to know if your client’s a good fit? Take our captive assessment to see if they’re built for success.
Who Should You Not Talk to About Captive Insurance?
Let’s be blunt: there are people out there talking about captives who shouldn’t be. A big one? Wealth managers who lead with tax strategy and have zero insurance background.
If someone doesn’t hold an insurance license and hasn’t worked in the insurance industry, they’re not qualified to advise you—or your client—on captive participation. Captives are an insurance strategy first. Tax benefits may exist, but they’re not the reason to enter.
The biggest red flag? Anyone who says, “Captives are a great tax play.” That usually means they’re pushing 831(b) micro-captives with zero focus on actual risk management or claims strategy.
Some wealth managers have a general understanding of the concept. But if they’re not grounded in insurance, their guidance can lead your client straight into trouble with the IRS, with compliance, and with poor results.
If your client hears “captive” and “tax strategy” in the same breath from someone unlicensed, it’s your cue to steer the conversation elsewhere.
Who Should You Talk to About Captive Insurance?
You’re helping your client evaluate whether to become an insurance company owner (or part-owner with a group captive). That means you need to be talking to someone who understands how to structure, manage, and evaluate insurance risk.
Ideally, you want to work with someone who:
- Has an insurance license
It’s not a legal requirement to talk about captives, but it’s a baseline sign that they understand how insurance actually works. - Knows how to evaluate risk management
Your client’s return-to-work program, safety protocols, and loss control history matter. A good captive consultant can help you identify gaps and build a better risk story. - Holds relevant designations
Look for certifications like the Certified Insurance Counselor (CIC) or, even better, captive-specific credentials like an Associate in Captive Insurance (ACI) from the International Center for Captive Insurance Education (ICCIE). These show a serious understanding of the space.
Captive Coalition works with agents who want to protect their credibility and put their clients in the hands of people who know what they’re doing. That starts with vetting who you trust with captive conversations.
Red Flags When Talking to Someone About Captives
When you're evaluating captive options for a client, these are the signs you’re talking to the wrong person:
- They’re selling hard
If someone’s hyping captives like they’re the greatest thing since sliced bread with no nuance or context, proceed with caution. Captives are a useful long-term financial tool, but they’re not magic. - They lead with 831(b)
If the conversation starts with, “You should look into an 831(b),” you should probably end it. That’s a tax election, not an insurance strategy. And it's under heavy IRS scrutiny. - They can’t tell you where the money goes
Captives are all about transparency. If the person can’t clearly explain how premiums are allocated, how claims are handled, or where the underwriting profit flows, walk away. - Your gut says something’s off
Trust it. If something feels hidden or shady, it probably is. You’re not just protecting your client—you’re protecting your reputation.
Want more on why the 831(b) crowd is risky? Read our article about micro captives. It’ll give you the context behind the red flags.
Questions You Should Ask Before Trusting Someone with Captive Advice
If you’re vetting someone to help your client evaluate or enter a captive, these two questions will reveal a lot:
- “How many times has your firm had a captive disallowed by the IRS?”
Why it matters: One disallowed captive is one too many. It likely means the structure was built around tax avoidance. Not legitimate insurance. If they dodge this question or downplay it, that’s your answer. - “Do you only work on 831(b) elections?”
Why it matters: The IRS has flagged 831(b) captives as a “transaction of interest.” That means they’re watching closely and assuming bad behavior unless proven otherwise. If someone only deals in micro-captives, your client is walking into scrutiny as the IRS becomes their best friend.
These questions help separate the legitimate operators from the promoters. If the answers feel vague, scripted, or evasive, get out of the conversation. And take your client with you.
Make Sure They Know the Basics of Captive Insurance
Want to quickly find out if someone actually knows what they’re talking about? Ask them:
- “What’s the difference between a cell captive and a group captive?”
- “What are the pros and cons of a single-parent captive versus a group captive?”
If they can’t answer those clearly and confidently, they don’t understand the structures well enough to guide your client.
You don’t need them to recite textbooks. But if they stumble through basics or give vague answers, that’s your sign. Keep digging or move on. Vetting the people advising you is part of the job.
Know the Pros and Cons Before You Talk to a Captive Expert
You now know what red flags to look for, what credentials matter, and which questions to ask. But before you start vetting someone for your client—or bringing in a partner—you need to know the fundamentals yourself.
Understanding the pros and cons of captive insurance helps you:
- Ask better questions
- Spot bad advice faster
- Protect your client (and your credibility)
Read our article The Financial Pros and Cons of Captive Ownership. That way, you’re prepared to evaluate whether this strategy fits your client’s risk profile and goals.
Want to learn more about captives from the experts? Become a member of Captive Coalition for FREE to access additional resources, tools, webinars, and training to better help your clients and maintain your book of business.
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