As a small to medium-sized business owner, you know this well already. You cannot afford to be without insurance. But some of you may now being feeling a little cynical or disheartened about this business fundamental. Many of you may even be saying that you cannot afford insurance, because every year the premiums keep going up at rates well above inflation. You may also be tired of the excuses.
The underwriters explain this away as a method to cover the losses. Whose losses? Certainly not yours. And that’s the thing about going captive. Captive insurance industry instruments free you up in more ways than one. For one thing, you are no longer responsible or negatively affected by the losses that other businesses make. All premiums captured by your industry go straight into a pool that is strictly reserved for your own losses or damages, should they ever occur.
And you may just find that such occurrences will now be even less frequent. Part of the captive premiums that you pay into this business goes into the proverbial job pool. Because it is here that you will have a lot more than insurance underwriters and agents working on your behalf. You will be supported by a risk management team who are positioned to advise you independently on how to better manage your risk.
You are no longer being dictated to by the insurance company. You will also receive solid accounting and financial advice on how to better manage your capital resources. Initially, there will be costs but as the fund grows, there could be scope for downscaling your premium payments. You will have freedom of flexibility in this movement. Of course, you will never be opting to pay as little as possible because you will want to pool your resources as effectively as possible.