When it comes to methods of self-insuring a business, captives rank highly because their existence as a separate entity minimizes a lot of potential administrative woes, and it also clearly delineates the liabilities incurred by operating an insurance company from the ones you encounter in your day-to-day business operation. That’s important, because even insurance companies need insurance, and your new captive business will have to have the resources to protect itself. If that seems like it’s going to create a lot of extra work, remember that one of the reasons businesses love to create captive insurers is because you can outsource the management of them to companies that specialize in it, making it even easier to operate a captive.
The biggest barrier to setting up a captive company is the same hurdle that often poses a problem for other methods of self-insurance, namely the up-front cost of keeping a cash reserve sufficient to handle claims. That’s where group captives help make this option even more affordable. You might be wondering what makes a group captive insurance company different from other captives. The answer is simple, you go in with partners and share costs. This means having to find a partner, but the same companies you can trust to manage the day-to-day administration of your captive are also usually capable of brokering that kind of partnership. Finding one and inquiring about being matched with other partners can help you get more affordable insurance while sharing risks and costs, delivering the benefits of both traditional and captive programs through this shared risk.
Trust a Matchmaking Company
It can be hard figuring out how many other companies you need as partners when you’re intending to start a captive insurer, but when you work with knowledgeable pros who understand captive operations, you can provide them with your information and let them do the leg work. Once they know what your insurance needs will be and what you have available for working capital, assessing the number of partners you will need is a matter of running the math on actuarial tables and financial projections.