3 Advantages of Having Captive Insurance

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captive insurance

Applying for insurance as a business owner can be stressful at best. There are so many companies to choose from, regulations to satisfy, and prices to consider that finding the best coverage can be a real challenge.

Captive insurance offers a unique way to insure your company and yourself and it’s been around for more than 100 years.

Though this type of insurance is well-established, most business owners aren’t familiar with the benefits it provides. Here are a few of the most common advantages of choosing a captive insurance program.

1. Improved Coverage Offerings

Standard insurance companies offer coverage at rates set by the industry. Those rates can be overly high for high-risk businesses. Worse, there’s no guarantee that the insurance company offers the exact coverage you need.

If you rely on standard coverage, you risk making your company more vulnerable.

By forming captive insurance companies, business owners are able to protect themselves against the risks they actually face. You’re in control of choosing your coverage types.

This allows you to protect yourself against the risks you face while saving money by avoiding coverage you don’t really need.

2. Fewer Regulations to Deal With

Captive insurance companies face fewer governmental regulations and oversight than traditional insurance companies. This is because the coverage protects the owners of the company. You can’t sell the coverage to other individuals.

The less oversight you have, the easier it is to customize your coverage options and meet the needs of your business well. Even better, you’ll save money over the life of your policies. To learn more about how those savings happen, click here.

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3. More Control for Owners

One of the biggest benefits of forming a captive insurance program is your ability to control how premium payments get invested. When you buy conventional insurance from a standard provider, they control the investments.

You won’t have a say in how they invest your premium payments. Worse, you won’t be able to benefit from the returns generated by the investments.

When you form a captive program, you and the other co-owners will be able to control the investments you make. Even better, you’ll be able to use the returns to grow your business’s wealth.

Is Forming a Captive Insurance Company Right for You?

Making the decision to form a captive insurance company isn’t one you should make lightly. You need to think about your company’s risks and your willingness to take on extra administrative efforts every month.

As the owner of a captive insurance program, you’re responsible for overseeing everything. You’ll create your own claims process, pay out settlements, and control investments of premium amounts. If you’re not comfortable managing those tasks, it’s best to work with a standard provider.

However, if you’re willing to put in the work and want complete control of your insurance coverage, forming a captive insurance company is a great option.

Looking for more ways to take control of your business’s finances? Check out our latest posts.