The proper protocol is not just about minimizing exposures, but also about properly insuring against losses that have to carry a significant financial risk. To this end, many businesses seek captive solutions in addition to standard insurance policies for these the top three reasons.
Fills Gaps in Existing Coverage
Insurance companies exclude perils they deem too risky to write, but that doesn’t stop these events from happening and dramatically impacting a company’s financial situation. To fill those gaps, businesses create captive insurance companies that can cover costly problems like supply chain disruption or the loss of key personnel during adverse events such as a global pandemic.
Lowers Overall Cost of Insurance
Companies can lower overall insurance costs by shifting some of the risks from their traditional insurance policies to the captive by choosing higher deductibles. This reduces premiums for the underlying conventional insurance policy by having the higher deductible paid by the captive insurance policy.
Provides Control Over Claims Process
Captive solutions allow for more control over the claims process because your company essentially owns the process, eliminating time and money wasted due to an insurance provider’s bad faith. They also allow for quicker turnaround time between loss and payment by eliminating the layers of bureaucracy that often plague large insurance carriers.
Risk management planning is not one-size-fits-all even though traditional insurance policies are typically written that way. Adding a captive insurance company to your overall strategy provides benefits that are vital to your company’s financial health.