831b Captives are insurance companies owned by small to medium sized businesses in many different industries. Benefits of owning a captive insurance include:
- (a) the ability to design policy terms and coverage to the specific needs of its owner
- (b) the ability to insure otherwise uninsurable risks
- (c) reduced reliance on the commercial insurance market as well as excess and surplus lines insurance
- (d) retention of underwriting profits and investment income
- (e) ability to structure risk retention according to the captive owner’s needs.
Consequently, captives would usually not be a good business decision if a business experiences poor claim history. There are always exceptions to this rule. For example, if a business eliminates operations that lead to a long history of claims, a captive could make sense. Businesses who take risk management actions which lead to a significant reduction in claims over a significant amount of time should consider captives.
Our expert captive management team has decades of combined captive experience. Thus, our captive owners confidently enjoy lower risk, creating a profit center and potential tax benefits.
Captives are a good business decision when a business practices good risk management. This means that a business is proactive which means they find ways to prevent insurance claims. Proactive businesses work diligently to prevent insurance claims. When claims occur, the proactive business reviews what happened and revises their risk management procedures. Not all insurance claims are avoidable, however reducing the severity of the loss can be accomplished. Today, Physicians are trained to admit their mistakes and offer their apology for their mistake without fear of increasing the size of the settlement judgement. Finally, a business who decides to discontinue a part of their business that causes claims could benefit from a Captive Structure