Forming captive insurance companies can be a lengthy process, but can be extremely beneficial in the long run. When forming a captive insurance company, one of the most important things to analyze is what risks the captive will insure.
- Identification of risks – During formation of a captive insurance company, you will need to identify what risks the captive will insure. In the normal course of business, you are likely paying premiums to one or more insurance companies to protect specific risks. When forming a captive insurance company, you will want to determine which risks you would like to insure with your captive and what risks should remain with commercial insurance companies. You may also want to determine whether there are risks currently not insured by your commercial carrier that you may want to insure through your captive.
- Include risks specific to your company – Real risks to your company should be included in your captive insurance plan, but you may want to select risks that have a relatively low frequency of occurrence. At the same time, you do not want to include risks that would never pertain to your company. This will help keep costs low and often premiums paid to the captive in excess of operating expenses and claims can be transferred to a surplus account to be used for investment opportunities.
If you are interesting in forming a captive insurance company, you should seek help from a company that can offer advice and consulting for captive insurance companies. Captive Resources has been around for over 30 years, and has helped companies control their insurance costs by becoming insurance company owners. Visit CaptiveResources.com for more information on our advising services for your specific needs today.