For best-in-class companies, traditional commercial insurance can be an onerous proposition: First, your company pays substantial premiums (based on industry averages and state rates) to transfer your risks to the carrier. In turn, traditional market carriers include your safety-conscious company in a generic pool of insureds, which often forces you to bankroll the losses of riskier businesses. The end result for best-in-class companies? Premiums that are not reflective of the risk your company poses, greater exposure to market fluctuations, and less control over total costs and coverages.
Captive Resources’ (CRI) member-owned group captive model is ideal for companies looking for a proven alternative to the traditional insurance market. In a group captive, you will share risk with other like-minded, safety-conscious companies because your premium is based on your company’s specific 5-year loss history. In addition, the group captives we work with retain only predictable (frequency) losses and transfer catastrophic loss via specific and aggregate excess reinsurance coverage to protect the captive. The end result? A viable, proven method of financing risk which provides your company with long-term stable costs, along with a host of other advantages.
Here are some of the main advantages of joining a member-owned group captive supported by CRI:
Traditional insurers typically develop premium based on industry averages and state rates, leading to pricing that doesn’t reflect your company’s actual loss experience. The member-owned group captives we work with will use your actual 5-year loss history to determine your company’s premium. And, a continual focus on risk control and safety within the captive will empower you to better control losses and lower your premiums over time.
In addition, commercial insurance carriers spend significant sums on marketing and acquisition, commissions, administration, and overhead — costs that are passed along to insureds. This cost structure is specifically designed to deliver profit to the insurer’s bottom line. By contrast, group captives minimize operational costs by unbundling services and reducing overhead, and as an owner, the savings go straight back to your bottom line.
Conventional commercial insurance is vulnerable to market fluctuations. As the market hardens, premiums rise, coverage tightens, and insureds pay the price. As a group captive member and insurance company owner, you’ll be less susceptible to the ever-increasing and unpredictable costs imposed by conventional insurers year after year. A group captive provides its member-owners the ability to smooth the cyclical volatility of the commercial insurance market.
Risk management and safety is a cornerstone of the group captives we support. To help members improve their risk control methods and better understand the factors that commonly lead to losses, the captives devote a significant portion of every premium dollar to loss prevention. As a result, a wealth of resources is available to individual member companies to support their continuous improvement.
In fact, an independent study found that group captive members that work with us experienced 22 percent fewer workers’ compensation (WC) claims compared to industry averages.
Safety pays for group captive members. When member companies increase safety and reduce losses, their unused loss funds and the accrued investment income on those funds is returned to them in the form of dividends. Members also earn investment income on capital and cash collateral.
Most companies insured in the traditional market have little involvement in how their claims are managed and adjudicated. As a member-owner in a group captive, your company will be allowed and encouraged to be more actively involved in claims administration. From access to adjuster’s info, regularly scheduled claims reviews, development of complex claim strategies, and involvement in the selection of counsel, it’s a process that focuses on driving claims to closure and lowering costs.
CRI supports dozens of member-owned group captives comprised of over 6,500 companies just like yours. Our captive clients are able to offer a solution for companies from an array of industries, with varying business structures and risk profiles demanding unique insurance coverage. We assist the captives in tailoring coverage for the group’s specific needs. As a captive grows, over time, its needs often change, and we work to ensure that its coverage offerings are aligned with members’ needs.
CRI coordinates and helps support its captive clients — from risk control and safety services, claims advocacy, finance and investment, underwriting, meeting facilitation, and more — and we work to ensure each captive runs smoothly. As a member of a group captive supported by CRI, you’ll spend less time addressing insurance issues and more time running your business.
Click here to learn more about how CRI supports its group captive clients and their brokers.