Captive Insurance: The self-insurance option that very few people know about, and how to know if it’s right for you

By January 18, 2019 Specialty Insurance
Captive Insurance: The self-insurance option that very few people know about, and how to know if it’s right for you

The traditional insurance market is not for everyone, although it is the most popular solution. When you enter into a traditional insurance agreement, you supply underwriting information to an agent who in turn creates a contract stating you will be repaid for losses should predefined circumstances occur, and then you are charged a premium to pay into that contract.

What many people do not realize is that there’s another, more mature insurance solution, that is receiving fresh and renewed attention. It’s called captive insurance.

Put simply, captive insurance is an insurance company that is wholly owned by the insured. The primary focus of captive insurance companies is money– more specifically making money, and using it to pay out your own losses. An organization may turn to captive insurance when traditional coverage is unavailable, is too expensive and/or doesn’t meet the organizations need.

Wondering if a captive option is a potential fit for your organization? Here are some of the main defining circumstances that this option is right for you:

  • If you have favorable loss history (5-year historical average of incurred claims <50% of total premium paid
  • If you have a strong commitment to proactive loss control and safety procedures
  • If you have financial strength defined by substantial and sustainable operating profits
  • If you are Interested in controlling your  insurance program rather than “buying” insurance
  • If you’re looking for a long term solution to control and reduce insurance costs
  • If you believe insurance costs should be based on actual losses vs. industry averages
  • If you understand the benefits of creating a profit center with pre-tax dollars
  • If you’re Workers’ Compensation, General Liability and Auto Liability minimum combined premiums of $200k+

 

If any of our criteria apply to you, captive insurance may be worth exploring. To learn more information about your captive options and whether you should seek insurance outside of the traditional insurance coverage options, contact Jeff Boardman, by calling 610-770-6600 x105, today.