Who is a Captive Candidate?

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You may have heard the term Captive Insurance.

But many may not know exactly if or how you can benefit from this type of insurance program.

Captives are alternative type of business insurance which is set up for your company and/or its related entities.

A captive is essentially an insurance company that you create specifically to insure your own company’s risk.

A strong reason to form a captive is to avoid using the traditional commercial insurance companies which may have volatile pricing year over year and may not meet the specific need of your business.

So who’s a candidate?

First and foremost your company must have enough risk for it to make sense.

An insurance company can’t exist without risk and you will need to have enough risk so that it can be actuarially priced to provide sustainable insurance coverage.

A company must be profitable.

If a company is not profitable, there are better options than to form a captive insurance company.

We expect our client companies to have at least $10,000,000 in annual gross revenue.

And companies with higher revenue amounts usually make very successful captive candidates.

One of the reasons for this is that greater revenue means greater risk and risk is always the key.

We like to see our clients with annual commercial insurance coverages that cost over $200,000.

And owners who are looking for alternative options, who understand risk transfer, and who have an entrepreneurial spirit.

Should a client meet these requirements, we would conduct a more thorough review to understand the business, the risk of the business, and the risk tolerance of the business owner.

Understand that you and your clients do not have to become experts in forming and managing a captive to take advantage of this type of alternative program.

At RMC Group, we guide you through the process of forming, managing, and staying in compliance with your captive insurance company.

A captive can be a great tool for:

  • Gaining control of the company’s risk
  • Procuring better coverage
  • Potentially lowering insurance cost
  • And it’s a gateway into leveraging by turning liabilities into assets.

Shoot me a message today if you want to discuss more.