Captive Insurance Programs Offer Flexibility and Security
Does your company need a risk management vehicle that not only protects your company, but also provides financial flexibility and return-on-investment? Oh, did we mention that you would also be the owner of this valuable risk management option.
Captive insurance programs are an attractive alternative to high premiums and deductibles normally associated with traditional insurance products. Captives are like ice cream and come in many different “flavors.”
There are captives formed as groups that insureds can join and there are businesses with the necessary critical mass to go it alone. Whether in a group or solo, captives are a form of self-insurance which requires some capital or collateral outlay but allow the insured to efficiently assume some of its own risk.
Why Do Captives Make Sense?
Captives represent improved efficiency by removing the standard insurance market from the equation so insureds capture what would otherwise be insurance company profit. Risk is mitigated and managed by purchasing reinsurance to cover exceptional losses.
Captive insurance is most often used for casualty lines of coverage. This broad category can include, among others:
- General liability
- Auto liability
- Comp and collision
- Workers comp
Oswald recognizes the value captive insurance programs offer clients and is dedicating its extensive pool of resources to creating captive products tailored to meet a client or group of clients specific risk management needs.
“This a very fast growing area of insurance and Oswald is on the bleeding edge in formalizing and bringing captive programs in front of clients to more effectively manage their risk,” says Jason Stevenson, CIC, CPIA, MBA, vice president, practice leader – captives, programs & alternative risk, for Oswald.
Stevenson says captives were usually handled as a one-off and done as needed, but now companies are seeing the value in taking on some of their own risk and potentially benefiting from it financially.
When considering a captive program, Stevenson advises clients that owning your insurance doesn’t mean you are taking on an administrative elephant that will tax your company’s time and resources.
There are also no limitations on geography, industry or company type, or kinds of coverages with captives. It can be owned solo, with partners, inside the U.S. or outside.
“Captives offer companies a variety of structures and approaches,” says Stevenson. “There are standard structured programs that can be selected, but if you can imagine it, Oswald can research it, put the math to it and identify solutions.”
Who Are Captives Designed For?
Captives will appeal to business owners or entrepreneurs who have been frustrated finding affordable insurance that meet the specific needs of their operation or industry.
Why are companies looking to captive programs to better manage risk? The answer is simple: it puts them in control.
In a captive environment, insureds own the insurance company. Having control can lead to favorable contract terms, claims handling, fees management, commissions, etc. This can result in net effective cost savings and/or greater coverage creativity and availability for your organization.
Captive programs also deliver stability in coverage availability and premium reliability. As capital accumulates in the captive, the insured expands its ability to insulate itself from changes in the commercial insurance market.
How creative can captive program be? With Oswald’s extensive experience and resources, the answer is very creative. Consider the following examples from Oswald clients.
A manufacturing company had sold a consumer product for more than a decade and the product began to fail. Flaws were showing up well after the product was installed and the manufacturer knew it would take multiple years and significant resources to correct the problem.
The solution: Oswald created a tax-efficient captive program that insured the specific product to protect the company against claims while not exposing the rest of the company.
In another case Oswald was able to secure a captive program for a group of towing companies who individually found it very difficult to secure affordable insurance.
Oswald’s Stevenson says the insurance marketplace was simply not fair to these companies – premiums increased to seven-figures – and they struggled with capacity.
“The leading companies in the market decided there was a better way to do this and by creating a captive program they solved the capacity issue and achieved a far better outcome,” says Stevenson.
Turn to Oswald
Determining if a captive program is right for your business requires connecting with an experienced insurance partner who has the depth of resources and knowledge to fully vet your specific situation.
Oswald is just the partner to provide thoughtful, carefully researched and customized captive solutions that provide stability, control and positive financial returns.
For more information, contact:
VP, Alternative Risk Practice Leader
Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.