P&C Premium Rates to Rise, Think Captives Instead

Property and casualty insurers are predicting a substantial increase in 2018 insurance premiums; thanks to Hurricanes Harvey, Irma, and Maria, two earthquakes in Mexico, and the widespread devastation caused by the California wildfires. However, a business can mitigate the financial impact of these natural catastrophes by taking on some of its own risks through the use of a captive insurance company.

A captive insurance company can play an integral role in shielding a business from the volatility of the commercial insurance market. A business can better manage its insurance risk through a captive insurance company. A captive enables a business to tailor its insurance coverage to its specific needs. It is not limited to the coverages available in the commercial insurance market.  In addition, a captive insurance company can reduce costs, because it is not affected by losses incurred in unrelated lines of business.

For example, commercial carriers may offer certain types of policies only with very high deductibles.  This means that a business may have to pay many thousands, or even millions, of dollars, out-of-pocket, before it can recover under the policy. A captive insurance company can provide coverage for that deductible or even offer a replacement policy that provides more complete protection at a lower cost.

A captive insurance company is a great way to reduce insurance expenses.  A captive eliminates most internal costs incurred by a commercial insurance company, such as commissions and overhead expenses. As a result, premiums paid to a captive more accurately reflect the actual insurance risk assumed by the captive.

To learn more about the potential cost savings of a captive and to increase your control over claims, contact RMC Group today at 888.599.5553.