Benefits to Creating an Insurance Company

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Imagine asking your business owner how much money you got back from their auto insurance last year.

If most business owners have the same reaction that I get, it’s they’ll act confused and say how much money they get back…

Well nothing!

Imagine then being able to say…

How much money would you like to get back?

See with the captive insurance company, you’re creating a profit center, a wholly owned insurance company.

And what that does is, most of the time in businesses you have risk and you’re sending that money to the Hartford or Travelers or Flo at Progressive, and they get to take that money and invest it.

And they get to keep the profits well…

Imagine if you set up your own insurance company, you get to keep the profits.

See what happens in a captive is the business and its affiliates can be offered similar or enhanced type of protections for those coverages that are needed for that organization.

The owner of a captive insurance company will be able to retain those profits in such a way that they be they’ll be able to enjoy that protection similar to that they’re getting from the traditional carrier.

In fact, in a lot of circumstances, it might actually be a little bit better.

Also because the premiums are sent to the captive insurance company, those monies resort to the captive and then become allocated as assets for future claims.

And the owners of those captives control and retain those monies for future needs.

Ultimately, it may be claims but there may be other needs that you have.

See a properly designed captive and one that’s well managed, can be very specific in its design.

You’re not taking off-the-shelf products, you’re actually designing specifically for that business owner and because that’s what the case is you’re taking those premiums that they’re sending in, converting them to possible assets.

And what that does is it takes those things that are normally cost items, the insurance premiums, and creating value inherent to that.

Okay so what’s that mean…

Let’s put some real numbers to that.

Imagine your that business owner, you’re spending let’s just say half a million dollars a year, $500,000 a year.

You’ve been doing this for the last 5 years.

So over that period of time, you sent $500,000 in each year for 5 years >> $2,500,000!

Imagine being able to say to that business owner five years into this you’ve sent that same $500,000 in, but now you have $s million, $3 million, $4 million because you were able to control and invest those monies (assuming you’ve had good claims experience)

What that means is… let’s go back one more step…

That $500,000 that you’ve sent in at the end of the year, we’re going to send you a ledger and we’re going to say you have $350,000 in assets.

So you’ve got $500,000 sent in and you got to retain $350, so your net cost was only $150,000 for that same protection.

So your choice is really this…

You can continue to send that money to the insurance companies and at the end of the day you don’t get anything back.

OR you can create your own insurance company and be able to retain and control those assets.

It’s your choice.