Hurricane-battered Louisiana plans to introduce legislation next spring that would enable businesses to band together to create local "captive" insurance companies. The rationale: to avoid pricey and sometimes erratic coverage provided by national firms.To create a captive insurer, a group of businesses provides enough capital to cover a fixed amount of risk. Then they secure reinsurance to cover additional losses. They appoint a manager

for the operation, often an outsourced company. If the captive is able to keep losses in check, excess reserves can be issued to the owners as dividends.Arizona, Minnesota, South Carolina, and Vermont are among the 27 states that permit captive insurers.

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