Choosing the right path in your insurance journey can be a daunting task. The captive insurance industry offers a great resource for exploring alternatives to the volatile nature of the commercial insurance industry. Captive insurance companies are member owned. Resembling a co-op like structure, this style of insurance offers its members more agency than traditional forms. Through investing their own capital, members are vested in their financial risk and are able to earn profitable returns. An alternative style to risk management, captive insurance can be tailored to the specific needs of members.
How Captive Insurance Works
The defining feature of a captive insurance company is that it is member owned. This trademark characteristic serves as a foundation for how these policies work and the benefits they reap. Licensed by a jurisdiction, these policies are recognized by the government and regulated by local insurance agencies. This form of insurance defines a framework for risk management that is specific to the needs of the insured. Members of a captive insurance policy pool resources and share risk. Members of these policies are viable for potential high profit returns.
The Benefits of Captive Insurance Policies
The traditional insurance marketplace can be extremely volatile. Fluctuating between high and low periods this can create a stressful environment for people with commercial insurance policies. The captive insurance industry eliminates an unstable cycle. Captive insurance companies pool resources of members enabling more predictable costs and more stability. Because members invest their own capital, they have increased control over their insurance, and can tailor policies to meet their specific needs and provide broader coverage. A captive insurer can create coverage for testing risks.
Working outside the commercial insurance marketplace comes with a multitude of benefits. With more agency comes increased profits, control, and coverage. Investing in a captive insurance policy is a great option if you feel like your current commercial policy isn’t fitting your specific needs and covering difficult risks.