Fronted Captive
A Fronted Captive is a captive that works with a licensed insurance company. In some cases, the parent company may be required to purchase coverage from a licensed insurance provider. To accomplish this, the captive can enter into a fronting agreement with a third-party insurance provider. The licensed, admitted insurer issues and administers an insurance policy on behalf of a captive insurer. Although the fronting insurer manages the policies and handles the claims process, it does not take on the risk.
Related terms: captive
Learn more: What is a Fronting Agreement (and how does it work)?