Why Consider a Captive?

The benefits of captive owner/membership are many. Group captive owner/members enjoy a level of transparency, stability, and control not experienced with traditional insurance. For captive owner/members, the continually-changing and unpredictable costs associated with conventional insurance are a thing of the past. Other benefits include:

Lower Costs.

Insurance provided by conventional insurers is typically priced to deliver profit to the insurance company. Captives, on the other hand, are designed to deliver that profit to its owner/members.

Traditional insurance often lacks transparency and typically includes markups to cover higher expenses for commissions, marketing, acquisitions, administration, and overhead. By minimizing such costs and providing complete disclosure of expenses, group captives provide you with the ability to control overall insurance expenses and improve your bottom line.

Potential for higher profits.

Captive owner/members are not underwritten by conventional methods that use standard state rates and modification factors. Instead, five years of the member’s individual historical loss performance data is trended and developed by the captive’s independent actuary and used to determine pricing/premiums.

As a result, a captive owner/member’s premiums and future dividends are tied directly to their own loss history. The better your loss performance, the lower your costs--and the more investment income and profit you accumulate.

Captive insurance provides returns of both investment income and unused premium in workers compensation, general liability, and automobile coverage. Traditional insurance provides no return of investment income and limited return of premium in workers compensation only.

Because captive owner/members rely on Alternative Risk Resources to implement and coordinate their captive program, they can spend less time on insurance issues and more time growing their business. Captives put money back in your pocket and into your company.

Better management.

Through the purchase of insurance products, such as direct access to reinsurance coverage, captive owner/members are able to transfer away catastrophic losses while funding for and covering predictable losses themselves. As a result, owner/members experience improved loss control and a greater awareness of the factors that commonly lead to claims. This awareness, and an increased dedication to safety, enables owner/members to take the steps necessary to prevent similar losses in the future.

Long-term control.

Group captive owner/members are better able to plan for the future because they can customize their insurance and safety program to meet their specific needs. And, because their insurance expenses are based on their individual historical loss data, they have direct control over their current and future premium costs. If your company, as a captive owner/member, continues to reduce losses over time, you will see a continued reduction in your premiums. This is not typically the case in the conventional insurance market.