Captive Insurance Arrangement In Charleston, Beckley, Huntington, Parkersburg, Morgantown, WV, Palm Beach, FL, and the Surrounding Areas

We all understand that insurance coverage is needed to help protect against unforeseen circumstances that may. But what happens if your situation is unique enough that you can’t find insurance coverage, or you need more coverage than can be provided by commercial insurance companies? There are other options available, and our team at Mark E. Snapp & Associates can help you understand them, including captive insurance arrangements and captive fronting. These two options provide a way for organizations to have the protections that they need without having to worry that a commercial insurance provider will end up pulling their policy and leaving them without protections.

Contact us today to arrange a time to discuss captive insurance arrangement options in Charleston, Beckley, Huntington, Parkersburg, Morgantown, WV, Palm Beach, FL, and the surrounding areas.

Captive Insurance Arrangement

What Is A Captive Insurance Arrangement

While we usually think of insurance as being provided by a separate entity that is unaffiliated to the insured, when it comes to a captive insurance arrangement it may be best to think of it more akin to self-insurance. Essentially an organization or group of organizations through an association forms a captive insurance company that is wholly owned by that organization or association. The captive insurance company only provides insurance to that organization and no one else.

Captives are great for:

  • The Captive Arrangement works best 25 or more enrolled employees; enrollment is very streamlined as will use a Census enrollment.
  • Bridging Coverage Gaps: They step in where commercial insurers fall short, offering protection for unique or excluded risks.
  • Customizing Policies: Captives let businesses create coverage that is truly tailored to their exact needs, something traditional insurance often can’t do.
  • Building Reserves: Over time, captives help businesses grow financial reserves, providing a safety net for unexpected or hard-to-insure risks.
  • Addressing Emerging Risks: From cybersecurity threats to industry-specific liabilities, captives adapt to cover challenges that the standard market avoids.

A pure captive insurance company only insures the risks of the parent company that owns the captive. A group captive is formed in order to provide insurance for the members of the association. A good example of a captive insurance arrangement is a large hospital forming an insurance company that provides liability insurance to the member physicians who practice at that hospital.

Captive insurance is often used to provide coverage for auto liability and workers’ compensation, especially for companies with a fleet of vehicles or a high number of employees. For example, a logistics company might use a captive to manage the risks associated with its delivery trucks. Similarly, a manufacturing firm could form a captive to cover workers’ compensation claims.

Cost Advantages of Captive Insurance

One of the primary reasons organizations consider captive insurance is the potential for financial savings. By creating their own insurance entity, companies can reduce reliance on commercial insurers, which may charge higher premiums. Captives allow businesses to retain more control over their funds so that they can allocate resources directly to claims rather than paying additional costs associated with third-party providers. Captives can also help stabilize expenses over time because they can protect companies from unpredictable price increases in the traditional insurance market.

Understanding Captive Fronting

Forming a captive insurance company doesn’t automatically eliminate scrutiny from regulatory agencies, as they may view such arrangements with skepticism. To ensure compliance with financial liability laws and other regulations, a licensed or admitted insurer is brought in to issue the policy. Since captive insurance companies are unlicensed and legally cannot write policies for their owners, the licensed insurer acts as a “front” for the policy. In this process, the admitted insurer formally underwrites the policy and pools the risk, while the captive retains the actual financial responsibility for claims. This collaboration allows the arrangement to meet legal requirements while enabling businesses to benefit from the flexibility and control provided by a captive.

Setting up a captive insurance arrangement and securing the necessary captive fronting for compliance involves navigating various legal, regulatory, and logistical complexities. At Mark E. Snapp & Associates, we specialize in guiding businesses in Charleston, Beckley, Huntington, Parkersburg, Morgantown, WV, Palm Beach, FL, and the surrounding areas through this process. Our team ensures your captive insurance solution meets all legal requirements while aligning with your organization’s goals. Contact us today to discuss how we can help you establish a compliant and effective captive insurance arrangement that works best for you.

 

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