The Pros and Cons of a Captive Insurance Program


Did you know that there were over 825,000 insurance providers in the USA in 2018?

Insurance is a lucrative market. Providers have a captive audience who are concerned about the impact of local and world conditions on their assets. The more the assets, the higher the level of risk and responsibility for owners. 

If you are a business owner, you may be looking for a way to manage your assets and risk without being bound to the provider’s demands. 

Have you considered a captive insurance program? Why may this be the insurance opportunity that you have been looking for? Why not check out our in-depth article to find out. 

Take Control of Your Insurance Needs

Forming a captive insurance company can immediately give you back control of insurance matters. You will be able to control how insurance is administered in your organization. It can even allow you to control the structure of the payment of premiums. 

This is an immediate pro, however, it does not come without cons. 

Captive insurance essentially means that you manage each step of your company’s insurance. This can be incredibly complex. You will need to balance the need for adequate insurance while attempting to lower insurance costs. This is extremely challenging and often cannot be done without outside consultation.

Control Your Premiums

Providers base their insurance premiums on many factors. These include factors that have no relation to your companies situation. They could include the company’s own overheads, financial goals, and expansion plans. 

As an owner of a captive insurance company, you have the opportunity to operate separately from these overheads. By simply choosing captive insurance you cut these costs out of your insurance premium price.

The captive insurance company is a part of your overall business plan. Therefore your company and its subsidiaries will be in support of the captive company. Their common goal will be to cooperate with their company partner. 

Premiums Bespoke to Your Unique Situation

Every company is unique. Even if you offer common products you may sell to foreign markets or use supply chains that increase your level of risk. 

Your unique situation may cause insurance companies to put you in a high-risk category which can lead to high premiums. Captive insurance can help you avoid this. 

However, although captive insurance gives you a degree of independence, claims still need to be met. Should you undervalue your assets, any subsequent claim could leave you meeting the cost out of your overall profits.

Would a Captive Insurance Program Work for Your Company?

If you pay large premiums to insurance providers, you are no doubt looking for another option. A captive insurance program can give you back control of the insurance of your assets and risk management.  If you are interested in learning more about business developments, why not take a look at our blog articles? We research the latest data to provide invaluable information that will keep you up to date with current trends.