To review, a captive insurance program is a wholly-owned subsidiary insurer that offers a customizable policy for your business. It differs from traditional insurance programs when it comes to your company’s profits, claims, and coverage. As a whole, it provides options for your company outside of a traditional insurance model. If you feel that your traditional plan isn’t as affordable or doesn’t cover business risks, a captive insurance program may be a better option for your company. Here’s a basic guide to help you get started in a captive insurance program.
As previously mentioned, captive insurance models are completely different from traditional insurance policies. To prepare yourself for all of the differences and key elements that coincide with both, take some time to research captive insurance programs. Many companies sign up for a captive insurance program without understanding the details that separate it from traditional insurance. Make sure you educate yourself on the investment and how it may affect your business.
Look at Your Business’s Feasibility Analysis
Before agreeing to a captive insurance model, you’ll need to take a look at the loss history, your long-term mission, and your company’s profitability. Before starting a captive insurance program, start collecting data and other related information a traditional insurance provider would request. This may include the following:
- Your profit margins over the previous years
- Your goals for your company’s future and how you plan to move forward
- Your five year loss history
Construct a Knowledgeable Team
Many businesses make the mistake of creating a team that doesn’t know much about captive insurance models. Before moving forward, it’s important to take time to decide who will be the best decision. A knowledgeable team can help you make sure things go according to plan and that your business runs efficiently. Overall, they can help you take advantage of all the benefits that come with a captive insurance plan.
Begin With a Conversation. It’s best to collaborate with people who are experts in the captive insurance model. They can tell you how your business may fit into the policy and what to do with your company moving forward. Before making any final decisions, make sure to reach out to a trusted professional. This should be someone who completely understands the captive insurance model and can guide you through the entire process.