CAPTIVE INSURANCE IN THE CONSTRUCTION WORLD
Captives are becoming increasingly as insureds begin to assess the risk vs reward of the traditional insurance market. A captive insurer is an insurance company, wholly owned and controlled by its insureds, with the purpose of covering the insureds’ risks WHILE allowing the insureds to benefit from any underwriting profits.
There are a few misconceptions regarding captive insurance programs. Some examples are:
- We are too small for a captive
- We don’t like the idea of going self-insured
- Captives are too difficult to understand
- We don’t have the capital to fund a captive
These are common myths regarding why captives aren’t for you. Let’s debunk them.
We are too small. Surprisingly captive insurance programs can be for insureds paying as low as $150k for casualty insurance.
Self-Insurance is not for us. Captives are not considered “self-insured” programs. Captives, like traditional insurance companies, pull premiums from all their insureds to pay losses and cover overhead. Captives use the philosophy to only insure the best in class contractors – therefore, allowing for savings and underwriting profits to be returned to the insureds.
Captives take too long to put together. It’s possible to perform a feasibility study in a matter of a few days, and then form or enroll a captive within a couple of months.”
Finally, capitalization for captives is much less than most think. It can differ based on size and claims history, but chances are, if you are paying $300k a year for insurance, the capitalization costs will be exceeded by the savings very quickly.
Captives are built for the construction company that has a long term focus on safety and risk management and want to be rewarded for their low loss ratios. Upcoming hardening of the insurance market will continue to increase popularity in captive programs.
About the Author
Share This Story
Related Blogs
Oklahoma Oil & Gas Businesses Receive Cost Credits Through EnergyComp Program
After fracturing the entire well, workers decrease the pressure at the wellhead and drill out the isolation plugs. A mixture of fracturing fluid and gas or oil flows back out of the well through flow lines into pits or tanks.
Recent Supreme Court Decision May Impact Coverage
Employee benefits liability (EBL) is insurance that covers businesses from errors and omissions that occur when employee benefit plans are administered. These errors and omissions may include failing to enroll, maintain or terminate employees in a plan, and failing to correctly describe benefit plans and eligibility rules to employees. EBL insurance covers a wide range of plans, including health, dental and life insurance, profit-sharing plans, workers’ compensation and employee stock plans. EBL insurance is typically sold as a standalone policy.
Prevent Slips, Trips and Falls in the Workplace
For most people, work can be both challenging and demanding. Meeting challenges can promote growth and increase resiliency for employees and organizations. However, demands and challenges may also result in high stress, which can be costly.