For decades, commercial health and life insurance companies have been the go-to for individuals, groups, and companies. They have also been the subject of frustration as premiums and coverage have constantly changed. In some cases, it has put many between a rock and a hard place. Do they keep paying the rising premiums or drop the insurance entirely?
The Alternative Solution
There is a third choice to make — captive insurance. Instead of relying on third-party companies, this form of insurance is more insular. A company or group of companies decide to run their own insurance organization. They set premiums, policies, and collectively vote on all changes.
There are definite advantages to running a captive insurance organization. Here are three ways this type of entity differs from its commercial cousin.
Everyone Has an Equal Say
The investors in a captive are also the customers. Thus, they are the ones who help make decisions on underwriting and offered programs. Furthermore, no matter how much they have invested, everyone has an equal say in how the captive should be run.
There’s More Predictability
The frustrations with commercial agencies arise from the unannounced changes to policies or premium increases. Because all changes are directly voted on, these shocks are nearly eliminated. And, since fewer premiums are sent to third-party companies which can make sudden changes, there’s more predictability to a captive program.
Powerful loss prevention tools are applied to captives. In turn, the instances of fraud or other malicious activity are greatly reduced. Thus, payouts are kept at normal levels. What does this mean for captive investors? The money they put in continues to grow with the program. In the end, they are guaranteed dividends during each disbursement period.
To get a better understanding of how a captive insurance program can help your organization, it’s best to turn to a management company. Organizations like Captive Resources have the people and materials needed to start your journey. Soon enough, you may be on the path to a new way of handling insurance issues.