Dec 27, 2018How Insurance Captives Can Aid in Risk Management
If You’re Not Talking About Captives, Someone Else Will
Middle market insurance clients are looking to find ways to work around an unpredictable market that makes them pay premiums even when they record minimal losses, seeing little in return. And with risk management and general health and safety rising in the corporate world, it’s not just large businesses looking for alternative risk transfer solution–it’s the small-to-midsized companies that are also looking.
Group captive program insurance solutions are the answer for businesses of any size. This kind of insurance coverage balances out traditional guaranteed cost policies and self-insurance solutions. With captive insurance, business owners take control of their insurance business, which allows them to produce premium-level savings. But if you’re not presenting this kind of captive program insurance solutions, another insurance company will and entice businesses to make a change.
Simple Proposition for Businesses
Captive program insurance solutions help businesses by allowing them to benefit from investment income on funds held and gain access to shared risk management resources. Members receive an insurance proposal that resembles a guaranteed cost proposal, but their premium is split between expenses and loss. If they have fewer losses than they thought they would have then the excess funding will be sent back via dividend. This creates a cost-plus proposition–who wouldn’t want that?
Middle market accounts can achieve great cost efficiencies with captive program insurance solutions. Firms can look into investing on behalf of themselves and get a good deal of financial kickbacks on behalf of good risk management practices.
For brokers, captive program insurance solutions pay the them a lower retail commission than what they would get in a standard market. Value proposition plays the same role for brokers as it does for the insured owner. Because the client now finds themself a co-owner of the group captive, the broker won’t have to market to them anymore. What this does is reduce the overall cost a broker has to incur every year in marketing.
Businesses are also becoming privy packaged programs related to captive program insurance solutions, including Bodega insurance programs. This kind of program offers multiple types of coverage options for businesses, protecting them in an full-circle way with things like workers’ compensation, general liability, auto liability, and physical damage coverages.
Insurance brokers need to provide captive program insurance solutions because of the high demand by businesses to protect their premiums. Insurance brokers may find themselves in a contentious arena when it comes to captive insureds, which could possibly make them miss out on clients down the road.
About Tangram Insurance Services
Located across the Golden Gate Bridge, just outside of San Francisco, Tangram is a full-service Managing General Underwriter and Program Manager offering specialty programs. We focus on industry-relevant coverage, competitive pricing, and practical business and risk management solutions for your clients. Since we are not all things to all people, we make sure to create outstanding custom-built solutions that matter to those businesses, and the brokers who serve those industries. Contact us at (888) 744-9810.