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5 Reasons Your Health Insurance Should Come from a Captive Insurer

Posted by : Premraj | Posted on : Tuesday, September 17, 2019

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It’s no secret that having health insurance is important. You need it to make sure that your healthcare needs are fully met. Yet, insurance can also be very expensive.

Believe or not, there’s more than one type of insurance. Have you ever heard of captive insurance? The basic concept is that captive insurance companies are owned and controlled by the insured. Their purpose is to insure the risks of the owners.

This article takes a look at the benefits of using a captive insurer rather than a more traditional insurance company. Keep reading to understand the most crucial facts.

Types of Captive Insurers

Captive insurers fall into two major groups. They are pure captives and sponsored captive insurers.

The Benefits

There are several benefits to this type of coverage. Let’s take a look at them.

1. Broader Coverage

There’s no debating that commercial insurance is extremely pricey. This is why so many people struggle with healthcare expenses, even with proper insurance coverage.

The cost of captive insurance is less prohibitive. That’s because it can more successfully offer coverage that is tailored to the specific needs on the insured, as long as the captive operates within sound regulatory guidelines.

2. Pricing Stability

The key to stabilizing insurance pricing is the accumulation of capital. This is accomplished by retention. As a captive matures and continues to accumulate capital, it’s more able to deal with the risks involved with the insured, which encourages them to maintain their policies.

This also enables the captive to insulate itself again fluctuations in the commercial insurance market.

3. Increased Control

Captive owners have more control over safety and loss control services. This means the services can be tailored to meet individual needs, thus resulting in safer workplaces among other things.

This is especially important when you consider the fact that the typical commercial insurance provider places its own interests ahead of the interests of the insured.

4. Cash Flow

Another advantage of captives is increased cash flow. How is this possible? Simply stated, captive insurance offers financial rewards for reducing losses, as well as for retention.

With traditional insurance companies, reduced losses are distributed as profits to shareholders. But with captives, reduced losses result in lower operating cost, and these savings can then be passed on to the insured.

5. Policy Flexibility

Lastly, a captive offers enhanced policy flexibility. This means that a group captive can offer its members wider options in policy design, coverage, and the way claims are handled. Again, this is due to the fact that profitability isn’t the core focus.

The Primary Advantages of Using a Captive Insurer

It’s not hard to see why shifting from a commercial insurance company to a captive insurer has become a desirable option for many people in recent years. After all, healthcare costs remain a major topic of discussion.

Everyone wants to make sure their family receives the best medical care available, yet that’s nearly impossible without adequate insurance coverage. Thus the importance of investigating every possible insurance option.

If you found this article informative, be sure to check out our website for more great tips on getting the most from your retirement.

 

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