The captive insurance industry is not an industry that the general public has a lot of knowledge about. A captive insurance company is a company that is owned completely by those that are insured by the company. It serves the same purpose as other insurance companies in that it covers those that have policies with the company. Those that are insured also benefit off of the profits of the underwritings of the company.
Successful insurance companies often accrue assets at a very quick rate. This means that most captive insurance companies have a huge surplus that owner can use at their discretion. This can be a good way for business owners to get money that they need instead of going to a bank for a traditional loan. Some people have detracted from the industry for certain things they don’t understand about it. Here are a few things that are great about captive insurance companies.
– Cover special risks – There are some risks where and individual or a business is going to have to purchase their own special policy to cover it. There are some other things that insurance companies won’t cover. Covering these things is the main function of a captive insurance company. They will cover things that businesses wouldn’t be able to get covered at an affordable rate otherwise.
– Tailored policies – This another premier aspect of being part of a captive insurance company. You can design and tailor a policy to meet your needs specifically. The client basically underwrites their policy themselves and the funds going into asset pool to be used later.
– Saves Money – A captive insurance policy is the best way to save money on insurance. There is no argument against that. When you underwrite you own policies the fees and profits that would have gone to a traditional insurance company do not exist. This saves a huge amount of money when it comes to your monthly policy. All profits from the underwriting go back into the pool. Are you seeing a trend here?
These are the three absolute best reasons to underwrite commercial insurance with a captive insurance company. Often times, businesses need to mitigate their risk with a special policy that fits their needs perfectly. This kind of insurance company is great for this. It can also save businesses a ton of money in the long run on their insurance while it serves as a great place to raise capital.