Captive Insurance for Self-Insured Employers

A captive insurer is an insurance company, usually formed and licensed in one of several U.S. states that insure the risks of one or more affiliated business(es). A captive insurance company enables businesses to have tailored insurance coverages that fill gaps and holes in existing commercial insurance coverages. Property & casualty captives are a sophisticated tool that can be used to supplement or replace commercial policies or simply to cover retentions or gaps in those policies. Direct access to the reinsurance market can also be a significant advantage to forming a captive. The following are ways that self-insurers can use the advantages of captive insurance.

Self-insured employers can use captive insurance to provide medical stop-loss coverage to protect the plan from specific and/or aggregate stop-loss coverage. This can be on a stand-alone basis or as a layer of a larger reinsured stop-loss plan. If loss experience is good, the captive builds surplus. If losses exceed expected levels, the funds from the captive cover these losses, stabilize the years’ fiscal results, and ensure that budget goals are met.

A captive can be a great tool to combine with statutory workers’ compensation. The employer can combine a significant deductible with a deductible reimbursement policy underwritten by the captive. The deductible enables the program to remain in compliance with the various state workers’ compensation regulations while allowing the captive to participate in good loss experience and a limited amount of risk at an appropriate level.

A captive can also underwrite currently self-insured property and casualty risks and if needed, secure stop-loss protection directly from the reinsurance markets. This should provide lower costs and increased pricing stability over the long-term. Essentially, self-insurance is a good idea; captive insurance elevates it to a great idea.

Bottom Line:
A captive insurance company can mitigate potential risks and stabilize business outcomes. In addition to managing the stop-loss expense, the captive can provide coverage for a wide variety of other risks. Examples include broad-form cyber liability, employment practices liability & other workplace issues.

Contact Capstone Associated at 713.800.0550 for more information.

Turnkey Captive Insurance Planning

Capstone Associated Services, Ltd. assists in the formation and management of captive insurance companies for mid-market businesses. Coverages written through a captive fill gaps in insurance and provide significant financial benefits, such as secured loans, dividends, and tax advantages.

Capstone’s team goes beyond risk management and serves as partners in finance, captive formation, and management, standing by clients throughout the captive’s life cycle. Capstone is one of the most sophisticated and integrated outsourced providers of captive insurance services for the mid-market.

Turnkey services include:

  • Feasibility study with independent professional sign off
  • Accounting
  • CPA independent audit
  • Insurance
  • Regulatory
  • IRS tax controversy support
  • State tax issues
  • Policy drafting
  • Coverage pricing
  • Ongoing management

An Experienced Team

With over 25 years of experience, Capstone provides turnkey services to mid-market businesses. Capstone has an award-winning track record for standing with clients in the design, implementation, ongoing management, and defense of their property & casualty captive insurance programs. Capstone has successfully administered and successfully managed over 200 captives since 1998.

Capstone's staff of professionals includes Chartered Property & Casualty Underwriters, insurance experts, risk managers, claims personnel, accountants, and administrators. Capstone’s expertise is bolstered by long-standing relationships with outside CPAs, risk managers, property & casualty professionals, and actuaries.

Together, this team offers middle market companies the most comprehensive risk planning solution available.


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