What is group captive insurance ?

Owners of big and small companies have a decision to make when it comes to health and life insurance. Do they stay the course and invest in commercial companies? Or, do they take an alternative route and get their employees involved in group captive insurance?

Captive Insurance Isn’t New

The first captive companies were established in the 1950s. Rather than sending premiums to third-party organizations, these insurance companies underwrote their own policies.

In the 1970s, captive insurance gained a strong foothold in the industry during a crisis where health care premiums skyrocketed. Today, several thousand captive insurance companies and management organizations, like Captive Resources, help others understand the concepts.

The Many Positives

There are numerous advantages and features of group captive insurance for employees. Here are three things they should know.

They Have Full Control

Investment in captive insurance programs is made by the insured. No matter how much is invested by an employee, they have an equal say the decision-making process. Thus, they vote on what the captive underwrites and the set premiums. In the end, it gives employees a sense of stability.

They are Guaranteed Dividends

Extensive loss management is built into a captive insurance program. Because of this, payouts due to fraud or other illegal activities is greatly minimized. Therefore, dividends on their investment are guaranteed depending on the payout schedule.

Insurance for Uninsurable Activities

Due to its flexibility, captives can normally insure uninsurable activities. In other words, items which commercial companies no longer cover. While there is a greater risk to investors, underwriting such a policy can increase the level of security for employees. And this can increase their happiness, productivity, and retention.

Switching from a commercial insurance to captive is not a quick decision. Thought has to be put in to determine the type of captive, initial investment, and the captive manager to use. A feasibility study should also be conducted to determine the captive’s popularity and if there is enough capital to proceed.