Private insurance — also known as a Privately Owned Insurance Company (POIC) — is a sophisticated risk management and wealth-building strategy used by 92% of Fortune 500 companies. The Latitude PLAN, offered by Reinsurance Specialties, makes this structure accessible to qualifying U.S. businesses generating $1M–$1B in annual revenue. Below are answers to the most frequently asked private insurance questions — covering what it is, who qualifies, how the tax advantages work, and what it costs to get started.
General Questions: What Is Private Insurance?
What is private insurance and how does it apply to my business?
Private insurance — also called self-insurance or reinsurance — allows your business to insure its own uninsured and under-insured risks rather than paying premiums to an outside carrier and never seeing that money again. Your business expenses premiums to a third-party insurance company you do not own, which then reinsures a portion of that risk and premium back to an insurance company you do own. Net of any claims, your company participates in the underwriting profit.
Is this the same as a captive insurance company?
It shares the same roots — the term “captive insurance” was coined in 1955 — but the LATITUDE Plan is a modern evolution of that concept. Importantly, it is not structured as a micro-captive or an 831(b) election, both of which have drawn IRS scrutiny. The LATITUDE Plan operates under an 831(a) designation and is domiciled within a sovereign tribal jurisdiction, not a U.S. state or offshore territory.
How long has private insurance been around?
Private insurance — also known as self-insurance or reinsurance — has deep historical roots. It dates back to the 1600s when merchants gathered at Lloyd’s coffeehouse in London to pool risk on shipping routes and cargo. In 1752, Benjamin Franklin helped establish the first private insurance company in the Americas — a company that still operates today. Today, private insurance is an $800 billion industry used by 92% of Fortune 500 companies.
Eligibility & Fit: Is My Business a Good Candidate?
Does my business qualify?
The LATITUDE Plan is designed for U.S. businesses generating between $1 million and $1 billion in annual gross revenue. High-risk and high-margin industries are ideal candidates, but the list is broad — medical, dental, legal, construction, agriculture, oil and gas, manufacturing, retail, transportation, hospitality, HVAC, real estate, franchising, and many more. If your business generates $1M or more annually, this structure may be one of the most powerful wealth-building tools available to you.
Are there businesses that are NOT a good fit?
Publicly traded companies, businesses with employee stock ownership plans (ESOPs), and companies heavily leveraged by private equity or outside investors whose contracts are structured around EBITDA tend to be more complicated fits for this structure.
What types of risks can I actually insure?
Every plan is built around your specific business risks, identified through a formal actuarial assessment. Common risks covered include business interruption, loss of a key employee or contract, cyber risk and data loss, legal and regulatory risk, reputational risk, Directors & Officers liability, errors and omissions, construction defects, subcontractor default, product warranties, and many more. Your standard commercial policies — auto, general liability, property and casualty, workers’ compensation — remain in place with your existing carriers.
The Actuarial Assessment
What is an actuarial assessment and why is it required?
Every client goes through a formal actuarial assessment conducted by an independent, third-party licensed actuary. The actuary reviews your financials, operations, and existing commercial coverage to identify uninsured and under-insured risks across categories including customers, suppliers, vendors, projects, technology, human resources, and property. This process is based on decades of actuarial data and industry-standard science — not guesswork — and ensures your plan and premium amounts are compliant and defensible.
What do I need to prepare for the actuarial assessment?
Preparation typically includes submitting your most recent balance sheet, profit and loss statement, and the declaration pages of all existing commercial insurance policies. The Reinsurance Specialties team will guide you through the process and help you prepare for your formal interview with the licensed actuary.
Financials & Tax Benefits
How much can I deduct in premiums?
Premium amounts are determined by your actuarial assessment and are specific to your business. A general benchmark is approximately 10% of gross annual revenue. For example, a medical clinic grossing $5.5 million expensed $581,000 in tax-deductible premiums; a law firm grossing $30 million deducted $3 million; and an oil and gas firm grossing $10 million expensed just under $1 million.
How does the tax advantage actually work?
Premiums are treated as a legitimate business expense on your P&L, reducing your taxable income at the top line. For example, a business generating $10 million in gross revenue with $1 million in net profit would typically owe roughly $400,000 in combined federal and state taxes, leaving $600,000 in after-tax cash. With the LATITUDE Plan, that same $1 million is remitted as an insurance premium — a business expense — leaving $850,000 (after the 15% ceding fee) sitting in your own insurance company’s bank account rather than going to the government.
What happens to my premiums after they are remitted?
After a 30-day risk transfer window, 85% of your remitted premium is deposited into a bank account of your choosing, held within your privately owned reinsurance company. Those funds are then available for claims, investments, loans, dividends, warranties, revolving lines of credit, and business expansion strategies.
What is the ceding fee and what does it cover?
The LATITUDE Plan charges a flat 15% ceding fee, which covers the full suite of wrap-around services including compliance, IRS tax preparation and filing, bookkeeping and accounting, consultation, loan structures, and claims support. This is notably lower than the industry average — many competing platforms advertise fees of 5–10% but layer in numerous additional charges that bring their true cost to approximately 32%.
Costs & Getting Started
What does it cost to get started?
The one-time capitalization cost is $14,990. This covers application, company formation by the tribal nation, the actuarial assessment, and policy issuance. Beginning in year two, the annual renewal cost drops to $6,750, which covers domicile renewal with the tribal nation and IRS tax filing for your reinsurance company.
What are the steps to get set up?
There are five steps. First, you capitalize your new insurance company with the $14,990 formation fee. Second, you complete company formation documents and select two potential names for your insurance company — formed as a C-corporation — and designate a President and Secretary. Third, you complete your actuarial assessment interview with the licensed third-party actuary. Fourth, you receive your specific policy and open a bank account for your reinsurance company. Fifth, you have a one-on-one consultation with a Reinsurance Specialties team member to establish your strategy, goals, and implementation plan. From there, you begin remitting monthly or quarterly premiums.
How long does the process take?
The process is designed to be straightforward and free of bureaucratic roadblocks. The Reinsurance Specialties onboarding team guides you through every step, and dedicated specialists are available throughout. Specific timelines are discussed during your discovery call.
Structure & Compliance
Who owns my insurance company?
You do. You determine who owns the shares of your reinsurance company, which is always formed as a C-corporation. You control the entity, the capital, and the decisions.
Why is the company domiciled within a tribal nation rather than a U.S. state?
Tribal nations recognized under the 1934 Indian Reorganization Act operate as sovereign jurisdictions. The LATITUDE Plan recommends select tribal nations — including the Modoc Nation of Oklahoma — because they do not unduly restrict insurance transactions, do not impose political constraints on ownership or management, and impose a much lower premium tax of 1% compared to state-level taxes of 3–6%. State-chartered captives also carry significant disadvantages including state audits, commissioner approval requirements for dividends and distributions, investment restrictions, and the risk of receivership. Domiciling with a tribal nation avoids all of these issues.
Is this flagged by the IRS?
No. The LATITUDE Plan is an IRS-compliant, 831(a)-designated structure that files annual federal tax returns. It specifically excludes all elements associated with IRS scrutiny — no offshore accounts, no risk pooling with unrelated parties, no trust agreements, no trustees, no outside administrators, and no micro-captive or 831(b) designation. It has been reviewed and endorsed by licensed CPAs, attorneys, and actuaries.
Does this replace my existing commercial insurance?
No. The LATITUDE Plan is designed to cover uninsured and under-insured risks that fall outside your existing commercial policies. Reinsurance Specialties does not typically recommend eliminating conventional policies in the first several years, and catastrophic risks are generally recommended to remain with large commercial carriers.
What happens when I need to file a claim?
As the insured, you decide if and when claims are submitted. Claims are reviewed by the third-party insurance carrier, which approves or denies them. If approved, the carrier pays the claim and seeks reimbursement from your reinsurance company. The claim filing process is simple — a brief claim form is submitted for quick review, and the process takes minutes.
The Latitude Plan™
A properly structured private insurance company gives you something the traditional market rarely does – control. Control over risk selection, claims timing, capital deployment and long-term wealth strategy.
By insuring uninsured and underinsured risk exposures through actuarially supported policies, you’re no longer just paying premiums – you’re repositioning them as a financial asset.
Across industries, Reinsurance Specialties™ clients adopt our best practice model – The Latitude Plan™ – to enhance risk management, mitigate losses, protect enterprise value and create a disciplined pathway for capital growth and generational wealth transfer.
Invitation: Learn More
If your organization generates between $1M and $1B in annual revenue and is interested in learning more about private insurance and how The Latitude Plan™ may support your broader risk management strategy, we invite you to explore further. You may also find our guide 10 Things to Know About Private Insurance helpful.
You can review additional information here, or schedule an educational, no-obligation ZOOM call with Reinsurance Specialties™ executive team to determine whether this approach aligns with your business objectives.
Every private insurance platform works a little differently, and this information is for educational purposes only. As seasoned private insurance professionals, Reinsurance Specialties™ can provide more detail, share our best practice model and deliver consultative guidance for your specific needs.
About the Author: Craig Clemons is a Principal at Reinsurance Specialties and a specialist in private insurance, alternative risk transfer, and POIC (Privately Owned Insurance Company) structures. Craig has helped business owners across 30 U.S. states implement The Latitude PLAN strategy. Connect with Craig on LinkedIn.
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