As a business owner, it is important to carry an insurance policy that addresses the exposures and risks of your operations. However, the premiums for this coverage can be taxing on a new business. It isn’t wise to go without liability insurance, so there is another option if commercial insurance policies are too expensive for your budget.
Providing Coverage for Niche Areas
There are times commercial insurance coverage isn’t readily available for a specific industry or business venture. Captive insurance is a solution to this problem, as a group of captives band together to form the insurance security. Because of the identity of the group of insureds, there will be a reasonable expectation of stability and loss. Because of the personal investment of capital into the captive program, adjustments are made as necessary to continue protecting the investment whenever areas of risk and exposure fluctuate.
Risk Management Assistance
Commercial insurance companies work to expose threats and liabilities through risk assessments, and a captive insurance program does the same for its insured. It is through the influence of captive members on other agencies within the group that cost consciousness and efficiency in services, loss prevention, and claims handling occurs. All of these ultimately create cost-saving processes.
The commercial insurance market establishes costs for coverage according to general industry classifications and trends. This broad scope of assessment does not take into account the variance among various companies and insureds. For this reason, the prices can fluctuate. With captive insurance programs, costs are established by the insured represented within the captive, and they are specific to the nature of their companies.
If your company needs financial protection for potential risks and exposures, you can choose between a captive insurance program or commercial coverage option. Look at the strengths and weaknesses of each option in light of your operations and budget concerns.