Alternative Risk/Captives: Insurance Profit Center
Today, closely held businesses are taking advantage of the numerous benefits afforded by captive insurance arrangements.
Group captives are independently owned and operated insurance companies that provide insurance to, and are controlled by, their owners. A captive insurance company analyzes and insures the specific risks of its owners and returns underwriting profits and investment income to them in the form of dividends. Unlike pure self-insurance, a captive allows companies to retain predictable losses while insuring catastrophic claims with other like-minded, safety-conscious businesses. At Odell Studner, we help companies of all sizes to achieve significant cost reductions and long-term savings. Rely on our experts to help you determine if a group captive is right for your company.
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Significant Reductions in Annual Premiums
Premium pricing formulas and group purchasing reduce insurance premiums for captive members. Whereas conventional insurance often includes mark-ups to pay for an insurer’s acquisition costs, higher commissions, administration and overhead, group captives minimize such costs to enhance your bottom line.
Estate Planning Opportunities
A captive can be a great wealth-building tool for business owners. While some expenses occur annually, potential wealth transfer in a tax-preferred structure can be quite powerful.
Less Pricing Volatility
A group captive structure limits a company’s exposure to market risk, making it possible to more accurately predict future costs.
Enhanced Profit Potential
Group captive members are rewarded for controlling their losses and claims by receiving dividends and investment income. A member’s loss experience directly determines dividends and future premiums, allowing one to be more competitive in the market.
Control Over Managing Risk
Every captive member holds a seat on the board and, therefore, can fully participate in decisions regarding claims and risk control. Members can customize insurance coverage to best meet their needs and, ultimately, reduce their long-term cost of risk.