Business owners like yourself have a wide variety of insurance plans and policies to consider. One of these options is group captive insurance, where a collective of parties stay under one plan and own an insurance provider together. This specific arrangement can provide you and these other businesses with some additional benefits not available in single-parent captive plans. Continue reading to learn more about some of the advantages you can enjoy.
Increased Investment Profits
Even though a group captive plan is supposed to involve multiple companies, shared risk and elective decisions, you will still be rewarded for your individual risk aversions. You can make the decisions on how the dividends are brought back to you. Additionally, these dividends are also tied back to your performance, so you will reap in the benefits of the program without paying directly for another party’s lacking actions.
Downplayed Market Risk
When dealing with insurance, you can never avoid market risk. Also, risk sharing among companies is a concept that sounds dangerous and not worth the work placed in group captive insurance. However, this specific plan can protect you from some of the more unstable, fluctuating claims. The retention layers in a group captive plan diminish the effect that these market fluctuations can have on your premium and your company.
Greater Performance Incentives
Even though some of the risks are mitigated by a group captive insurance plan, the companies involved will still share some of the potential losses when they occur. Rather than being a disadvantage towards that set up, it creates an incentive for the parties involved to improve their risk aversion process. You or another party do not want to contribute additional expenses, so there is a greater drive to improve performance.
While group captive insurance involves sharing some consequences, it also provides a few advantages. Consult with professionals and decide on whether this plan can benefit your business.