Captive Insurance Companies

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"This is the greatest strategic advantage in 25 years. I put $400,000 a year more on my bottom line...it is powerful."

-------So says a distributor about the captive insurance program his company has been in since 1987.

Background

Hanks Insurance Group, Inc. recognizes the benefits that will accrue to qualified firms through the use of a captive insurance company. Accordingly various alternatives were explored. We concluded that the best results for members could be achieved by combining our expertise with that of Captive Resources, Inc.

Captive Resources, Inc. was founded for the express purpose of helping individual companies, groups and associations form captive insurance companies. They have created many captives, including a highly successful heterogeneous group of captive formed in 1982.

 

Discussion

A captive is a closely help insurance company which provides coverage for and is controlled by its owners. In this case, property and casualty insurance coverage's will be provided to member companies by their own captive company.

The principal advantage of a captive is that members achieve control over their long-term insurance costs. While the actual savings that any one company may realize depends upon a multitude of factors, the potential for sizable reductions in cost certainly exist. Moreover, captive ownership allows companies to have the availability of quality insurance without being at the mercy of the traditional insurance market.

It would not seem unreasonable to project the long-term insurance savings potential for captive members at 20-30%. These savings should increase over time.

Covered risks include property and casualty business insurance, such as:

Workers' Compensation:

Coverage A & B

General Liability including

Products Liability

Auto Liability including

Physical Damage

Property Coverage's including

Business Interruption

Other general business insurance, such as D & O, Crime, Boiler & Machinery, E & O, Sexual Harassment & Termination and Umbrella Liability may be purchased on a group basis which should further enhance the potential for savings.

Why costs are Generally Lower

There are four key reasons for cost reductions over conventional insurance.

  1. Premiums are based on the loss experience of each member company, rather than on insurance market conditions.
  2. Fixed cost are lower. Marketing costs are reduced, but moreover, other fixed costs are unbundled and bid competitively to get the most favorable arrangement.
  3. Only companies with good loss experience are accepted into the captive.
  4. Enhanced loss prevention actively will enable many companies to further reduce their incidence of loss and hereby increase their savings potential.

Members can control and manage their own risk exposures!

Qualifications for captive participation

  1. Premiums over $200,000. Future enhancements to this program will allow companies with smaller premiums to participate.
  2. Loss experience that is better than industry average.
  3. Management commitment to programs for loss prevention and control.

 

Some other benefits of being in a captive

Stability. Premiums are not tied to market cycles or to the many rating problems of the workers' compensation system.

Coverage availability. Member companies are not subject to the whims of the traditional insurance cycles.

Benefit from savings. Member companies gain profits and reduction of fixed costs.

For more information fill in the following.

Name(First Named Insured & Other Named Insured)

Phone:

Mailing Address(of First Named Insured)

Address Line 1:
Address Line 2:
City:
State:
Zip Code:

Business Type

Individual Partnership
Corporation Joint Venture
Subchapter "S" Corporation Limited Corporation
Not-for-Profit Organization Other(Please Specify)

Business Information

Years in business:

Inspection Contact:
Phone Number(Area Code, Number, and ext.):
Fax Number:
E-mail Address:

Accounting Records Contact:
Phone Number(Area Code, Number, and ext.):
Fax Number:
E-mail Address:

Nature of Business:

Please check coverage for more information.

Workers' Compensation:

Coverage A & B

General Liability including

Products Liability

Auto Liability including

Physical Damage

Property Coverage's including

Business Interruption

 

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