If you are a business owner currently spending over $500,000 annually for your business insurance policies, setting up a Captive Insurance Company could have a significant positive impact on your business.
A Captive Insurance Company is a private insurance company created for the primary purpose of insuring the risk of a parent company. At the very least, a business should be able to reduce its insurance expense by forming a private insurance company. But the obvious benefit is that if you pay your premium, and you don’t suffer a claim on your reserves, the premium stays inside a business that you own and control. If you went three years without getting in a car accident, would your auto insurer give you a refund of your premium? Instead of your insurance being a constant annual expense of your business, it can now be a profit center of another business you own and control
Captive Insurance is a proven strategy for risk management that large corporations have employed for years. Captives have existed since the early part of the 20th century. Many Fortune 500 companies have Captive Insurance Companies and several well-known insurance companies today got their start as Captives. Because of recent developments in the law, captive insurance has become a strategy that small to mid-sized businesses can now employ.
Benefits of Captive Insurance
- Filling the Gaps – Policies can be custom tailored to business needs and can address items typically found on the exclusions page of your current policies.
- Risk Transfer – Focus on business and let the Captive insure the risk.
- Cost Efficiency – As an insurance company, the Captive can access the Reinsurance market to cover risk greater than the premium. Your premium essentially becomes a very large deductible. When the deductible increases, the premiums decrease.
- Profitability – Unused reserves of the Captive are held within the Captive. It is an independent business with a goal to make a profit.
- Estate Planning and Asset Protection
This is a solution that is not well known and provides huge benefits. Contact us to find out if a Captive Insurance Company could benefit your company.
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