Captive Insurance

Does your company’s risk management program benefit the bottom line? Captive insurance is a type of alternative risk financing that can reward businesses for keeping claims low through operating safely and efficiently.

Alternative Risk Financing


What is Captive Insurance?

Simply put, a captive insurance company is a company that is owned by the same companies it insures.

 

In the traditional insurance marketplace, an insurance company  underwriter evaluates your risk based on information submitted in your application and then creates a contract that agrees to repay losses under certain circumstances in exchange for a fee.

 

With captive insurance, member-owners are active participants in the company, sharing both the risks and rewards.

 

Insurance captives find success through three basic principles:

With a stake in the results, companies are motivated to follow improved risk control policies and claim management procedures.

Pooling resources allows for savings through group purchasing of risk services.

Unbundled services lead to lower fixed costs and retention of investment income.

The Benefit of Captive Insurance

The primary goal of a captive insurance company is to provide long-term pricing stability and more control of the pricing as it is based largely on your company’s claims experience. Ultimately creating or joining a captive insurance company can help your company cover risks more efficiently.

Types of Captive Insurance

The primary goal of a captive insurance company is to provide long-term pricing stability and more control of the pricing as it is based largely on your company’s claims experience. Ultimately creating or joining a captive insurance company can help your company cover risks more efficiently.

 

Single-parent captives have only one owner, the parent company. A single-parent captive allows a company to closely monitor and insure its unique risks. This type of captive is traditionally created and managed by large organizations.

 

Group captives are formed when multiple, like-minded parties come together to form a single insurance company that suits their needs. Group captives can be homogeneous or heterogeneous. A homogeneous group captive is one in which the companies that form the captive are in similar industries and may require coverage that’s difficult or prohibitively expensive to obtain in the commercial insurance market. A heterogeneous group captive can be made up of companies from different industries.

 

At Lyons Companies, we have expertise in matching middle-market businesses with the funding options that best meet their business goals and objectives. Our team can help you decide if alternative risk financing, including group captives, is an option for your company.

Enterprise risk captives, also known as “micro-captives” or “831(b) captives,” insure a variety of risks faced by their owners in one packaged policy. Enterprise risk captives are used to insure risks which are not covered by conventional policies or for which coverage in the commercial market is difficult or expensive to obtain.

 

Lyons Companies can help you determine if an enterprise risk captive would benefit your business.

How to Qualify for a Captive

Companies with a favorable loss history who want to take control of their insurance costs are good candidates for captive insurance.

 

Lyons Companies makes alternative risk financing work for financially strong businesses with proven success in limiting claims and managing risk. The process starts with a feasibility study to determine if a captive is appropriate for your company. Once you’re comfortable moving forward, we’ll then identify which captive might be suitable for your needs.

Captive Insurance: The Lyons Advantage

Lyons Companies works with several captive managers, who collectively manage over 35 captive facilities. Our experience allows us to recommend the best fit for our clients. We’ve successfully placed more than 100 businesses from a wide range of industry sectors in group captives.

 

As one of the largest, independent and privately held risk management and insurance brokerage firms in the Mid-Atlantic Region, we’re experts in identifying the right captive insurance opportunities for middle-market businesses. We combine large-firm resources with independent, local-firm responsiveness to deliver unparalleled personal service.

 

If you think captive insurance may provide the right alternative risk financing options for your business, contact us today to learn more and get started.

Lyons was able to provide us with an alternative risk strategy that turned premiums from an expense into an investment.

~ Joe Pendrak, CFO, Jamestown Painting

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.

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