Captive Insurance: An Alluring Alternative to Conventional Insurance
Conventional Insurance Over the years, businesses have purchased conventional insurance for protection against risks. With conventional insurance, employers pay a pre-determined premium to an insurance carrier. Premium rates are set by the carrier and are typically high. Rates are fixed and tend to increase each year. In this model, employers overpay to cover potential losses, regardless of if they occur. The insurance company retains much, if not all, of the underwriting profits and investment income earned on the premiums collected.
In this model, organizations with a history of safety are in effect penalized – they’re paying high premiums due to a mere potential for losses.
Captive Insurance An increasing number of companies are seeking alternative solutions. Over the last 15 years, there has been significant growth in the captive market. This alternative form of risk management is becoming a more practical and popular means through which companies can protect themselves financially, while having more control over how they are insured.
In this model, organizations assume some of the risk, but rather than pre-paying for any losses that could potentially occur, they invest their funds and only pay for actual losses as they occur. Safeguards are built into the captive to protect against catastrophic loss. For businesses with a history of safety, this model makes sense. Captive insurance is an effective way to save on premiums while ensuring your company is protected.
Thomas McGee, L.C. are experts in the captive market. We currently have over $55 million of premium in alternative funding mechanisms. Thomas McGee has the knowledge and expertise that you are needing and looking for. We work with companies every day, reviewing their current plan design and determining if the captive model makes sense. We know the market and have sophisticated strategies to help you design a custom plan that protects your organization against risk, while saving dramatically on premiums.
Check out our Captive Case Study for testimonies from two clients who recently made the switch.