Turning premiums into investments through captives
Like many businesses, Jamestown Painting struggled to find affordable insurance coverage that precisely fit its needs. Worse, the company’s strong safety performance and low claims incidence never seemed to lower its premiums. By targeting a couple of specific performance metrics, however, the Lyons team was able to provide Jamestown with alternative risk strategy that turned those premiums from an expense into an investment.
The key to that strategy: Captives – insurance companies owned by the businesses they serve. Through captives, companies with similar needs can work together to not only design tailor-made coverage (including for workers compensation, general liability and automobile liability) but also reduce costs and improve transparency and stability. Furthermore, by limiting losses, participating companies can recoup unused loss funds and investment income – turning a cost into a profit center.
In fact, Jamestown has enjoyed a 40 percent return on the premiums it has paid since joining its captive. “Joining a captive seemed like a big move, but once Lyons outlined the benefits and found us the right partner, it was a no-brainer,” recalls Joe Pendrak, Jamestown’s CFO. “The Lyons team guided us through every step of the process. And now we can use the returns we earn on our premiums to strengthen our bottom line.”