GPWA Managers & Consultants
Many businesses are faced with rising insurance costs and an increased amount of risk that is self-insured, either by choice or by necessity. Depending on the nature of the business, adequately insuring risk can be one of the most costly expenses a company is faced with.
Self-insurance is one way to mitigate that expense, that is, until there are significant claims which deplete the company’s ability to fund its regular operations.
An increasing number of medium and small sized companies are implementing captive insurance programs to address these serious insurance concerns. A captive insurance company (or Captive) is a corporation formed either in the United States or in a foreign jurisdiction for the purpose of writing the desired type of insurance to a small (and usually related) group of insureds.
A specialized type of Captive is a producer affiliated reinsurance company (PARC).
Some reasons to consider a Captive are:
- Stabilize the cost of insurance
- Reduce frictional cost
- Obtain insurance not otherwise available
- Custom design the type and level of coverage to fit needs
- Control the claims process, particularly in litigation with third party insurance companies
- Benefit from good claims experience and provide an incentive for improved risk management
- Have investment control over the Captive's assets
- Have access to the reinsurance market
- Consider possible estate planning, business succession and income tax opportunities
While the benefits of a captive insurance company may be many, the principal goal is to reduce frictional costs of third party insurers and/or provide coverage otherwise unavailable.
A feasibility study is necessary to determine if a captive insurance company is right for you or your clients
For more information regarding captive insurance or to discuss a feasibility study, contact:
Lawrence Prudhomme, click here
For Captive Services click here
Tell more about a PARC click here
Call us at 602.200.6900 or e-mail us here
2700 North Third Street, Suite 3050, Phoenix, Arizona 85004-1129