☰A self-insured retention, or SIR, is the layer of each loss your business pays before an insurance policy responds, similar to a deductible but with your company handling the claims inside it. Many businesses carry large retentions today, either by choice or because the market pushed them there, and fund those losses out of operating cash as they happen.
That layer is where many captives begin. The captive insures the retention, a structure often called deductible reimbursement: premium is set actuarially for the layer, losses are paid from the captive rather than from operating budgets, and the volatility your P&L used to absorb becomes a planned, pre-funded number. It is a contained first step that converts spend you were already carrying into the beginnings of an asset, and it is one of the six ways captives commonly participate in a program, from filling coverage gaps to eventually writing third-party business.