11 Mar Why Using Captive Insurance Makes Sense For Any Size Company
For companies of all sizes, insurance can be a massive headache. This is why the idea of captive insurance was created. It essentially maximizes the return on investment by narrowing the risk factor of the insured company. Any profits that are left after insurance claims and losses have been tabulated are also to the benefit of the owners of the captive insurance company, which is the company being insured. Here are some other interesting reasons for any company to utilize this insurance setup.
1. By engaging in the act of self-insuring, the company is greatly reducing the amount they spend on premiums because the profit of the insurance company is essentially eliminated. There is also the benefit of the entire group of companies being insured under the captive are of a low risk profile.
2. When dealing with insurance companies of a more traditional nature, there is the pitfall of having to abide by the decisions of the insurance company during the claims process. When dealing with captives, the captive company makes it own decision regarding any claims that are submitted to them and they are generally of a more favorable outcome than in conventional circumstances.
3. Occasionally, companies may find themselves in a situation where they cannot find suitably structured coverage or even any coverage at all. Companies that offer captive insurance services have much more control over the structure of the policies and coverage that they offer. This fact alone make captive services far more appealing than run of the mill mainstream insurance companies.
4. There is a wonderful side benefit to enrolling in captive services which is the ease of information sharing. There is a great incentive to all companies involved with the captive to minimize risk as much as possible. To do this, companies can easily share information regarding best practices and help each other so that everyone benefits from the mutual relationship.
As can be seen, it is to the benefit of many a company to find out more about captive insurance companies. There is little to no downside about the arrangement.