Insurance costs continue to rise across the board for many industries. As the total cost of business continues to rise, many mid-size businesses continue to seek ways to save money on the things they must have, like insurance costs. Captive programs have helped large corporations for years to save money as they have improved their risk management techniques. Using a qualified rent a captive program, mid-size companies can now reap the benefits of this process by managing their risks in a more professional manner.-Rent A Captive-
A captive insurer is a closely held insurance company that benefits in the same way that a normal insurance company does. They collect premium, manage losses based on underwriting, and grow profits through investment income. Companies that take advantage of captive programs find increased profits from their proactive risk management, are able to self-insure themselves at better rates, and continue to self-insure in jurisdictions that do not allow traditional self insurance programs. With a rent a captive program smaller companies can now do the same thing.
The advantages of rent a captive programs gives a company the same benefits and profit potential of a well-run insurance company. They are able to profit from careful underwriting decisions, retain control of the premium dollars, keep the profit from investing those premium dollars, and realize additional savings from operating a streamlined insurance program. Monitoring their insurance risks and using reinsurers to spread unwanted risks lowers the total cost of insurance resulting in even more savings.
Companies must be able to provide enough premium dollars to a rent a captive program to justify the administrative costs that are involved. Mid-size companies should normally have current premiums of about $750,000 per year in order to benefit from a rent a captive situation. They must also be willing to proactively manage the risks of their business and be able to operate in the face of an unexpected loss. A well-capitalized, proactive business can look to a rent a captive situation as not only a risk management tool but as an additional profit center.
A mid-size business that takes advantage of the benefits of a rent a captive insurance program does not have to face the upfront administrative costs, capital investment, regulatory paperwork, or significant maintenance and management costs. By “renting” the needed corporate structure, the company achieves all the benefits without the hassle of starting it from scratch. The premium dollars of the company are not pooled with those of any other company even though the background company running the rent a captive program many have a number of business doing the same thing. Rent a captive programs can save a lot of money where insurance is concerned. They can also help smaller companies improve benefit packages, retain key employees, and provide for additional shareholder profits. A winning situation for all involved.