Thousands of small, medium and large sized companies across the country continue to rely on conventional means of insuring their commercial assets. But for a number of years now, a margin of these companies have been turning to alternative means of commercial short term insurance to help them lower their costs and provide them with more independence and control over how they can secure their assets at risk.
Captive insurance is an alternative insurance practice not entirely shrugged off by conventional insurers. They too realize that there is value to be had when utilizing this principle in line with unique corporate circumstances. During exceptional cycles of business, even insurers and brokerages rely on captive services. But because it remains a relatively unknown business principle in comparison to the conventions, stringent guidance, advice and administrative assistance is best advised and sought.
One company is in the position of advising all captive insurance companies, as they may term themselves. Full knowledge of all conventional insurance practices is already within the captive company’s armory. These include costs of acquisition, marketing expenses, commissions, administrative and overhead costs. One of the goals when buying into the captive service is to achieve profitability and protect an insurance company or corporation’s bottom line.
Another goal is to always seek out new innovative measures to continue to drive down unnecessary costs. A captive insurer is essentially an alternative insurance consultant. One innovation long in use now is calculating insurance premiums based only on a single company’s loss ratios rather than measured unfairly against a collective. Active engagement benefits clients whereby risk management work helps them to have more control over their risk and prevent future or potential losses.
The processes of engagement and administration may not be conventional but they are formal.