Insurance costs are a reality of doing business in today’s world. Companies can either choose to insure their companies or they can take massive risks, exposing themselves to potential ruin if something happens to go wrong. With this in mind, most companies make the rational decision and choose to insure. For decades, though, companies have looked for ways to save money on this necessary cost. Captive insuring has entered the fray to help people deal with those costs. More companies are turning to these schemes to get what they need without having to break their yearly budget.
Captive insuring is a system where the profit incentives for insurance companies are taken out of the equation. Instead of going to an insurance provider that is pooling risk and taking its cut, a company will team up with other companies in its own industry, allowing them to insure together without having to give so much value to the insurance provider. It is an especially good option for those who happen to work in industries with lots of competition. By coming together, companies are making the pie bigger rather than fighting about who gets the biggest slice of it.
In addition to taking out the insurance company’s profit incentive, the captive model also allows for fairer and more direct insurance provision. The captive models, when they are constructed properly, provide for direct apportionment of risk based upon a company’s history rather than aggregate averages and the like. Some companies find that this model rewards them for being responsible. If they have not had to file an insurance claim, then they can benefit in many respects from their own good works. This can save them money while also providing even more of an incentive for them to do the right things and avoid the need for their insurance policy in the first place.
As more companies figure out that they do not need the traditional insurance models, captive models are becoming all the rage. Of course, captive insurance requires know-how. Some industries are not set up to handle the captive model, and many companies are not yet comfortable working in this way. This is where captive insuring consulting companies have stepped in to help. It seems likely that over the years to come, there will be more companies relying on this sort of insurance to help them perform more efficiently.
29 year old Quality Assurance Manager Lester Adney from McBride, has numerous passions that include rescuing abused or abandoned animals, business and yoyo. Will soon carry on a contiki voyage that will incorporate visiting the Kasbah of Algiers.