General Article

Benefits of Utilizing Captive Insurance

Captive insurance is quickly becoming a great tool for businesses to capitalize on their risk financing alternatives. The benefits with such an arrangement far outweigh the the drawbacks. Here are some of the top benefits for using a captive insurance group.

1. Underwriting profit is one potential benefit of using captive insurance. While this is not profit in the traditional sense, as a company cannot profit from not selling anything to others, it does offer the chance to pay less in losses than a company would pay in more traditional insurance settings.

2. A captive insurance company is able to easily purchase reinsurance. It was not too long ago that only an insurance underwriting company would be able to call and request reinsurance. However, those times have changed and now any company which participates in a captive insurance program is able to call and request reinsurance policies.

3. In the case of a wholly-owned captive, the funds which are held to pay out losses can also be used as an investment income source. The rate of return on these investments can either be a preset rate or fall into a range which the investment percentages may fall into.

4. One of the most powerful benefits which captive insurance provides is the degree of control to which is given to the policyholder. The power moves from the commercial insurance holder and is given to the policyholder who can then assert far more influence over the payment methods for predictable losses.

5. Administrative departments love the way that losses can be allocated within the confines of a captive insurance company. This advantage of consolidation makes it far more easy to manage the administrative tasks which are par for the course when dealing with insurance claims and losses.

These are just a few of the many solid benefits which a company can expect from participating in a captive insurance program. It would behoove a company of any size to look into just how a captive insurance program could benefit them. Why give away power when it can be yours to keep?