What do the best captives look like?
The best captive insurance companies are those created and utilized by organizations that understand their risk profile better than the traditional market does, have superior loss histories and have more robust risk management practices in place. These captives are run and operated by organizations that have the ability and knowledge to take on greater control over their risk and their risk financing. The entities also understand that it takes time and money to manage a captive. A company needs to capitalize the captive and then there are ongoing operating expenses.
What are the disadvantages to having a captive?
While a captive may look like an attractive option, there are potential downsides including:
- Potential loss of underwriting profits and investment income
- Potential loss of investment/collateral funding
- Sharing risk among business owners
- Long-term commitment
How should one get started on exploring a captive?
Talk to your broker about further education and assessment of captive viability. If a captive makes sense, Alliant will complete a Feasibility Study and help with next steps once it is determined a captive is the right option.
For more information, contact:
Marilyn Quinlan
marilyn.quinlan@alliant.com