The trucking industry is working fast to meet growing consumer demand for freight, long-haul, logistics, and related services. 3.5 Million trucks transport goods from coast to coast in the U.S. each day. But despite the enormous need for reliable trucking services, risks such as auto liability, physical damage, cargo, workers’ compensation, and employment practices liability are increasingly difficult to secure at a reasonable cost.
Forming a captive insurance company can combat these risks with a one-two punch:: a captive insurance program working in combination with a highly-rated commercial insurer can bring the total cost of risk down for trucking business that control losses. This approach also provides a higher level of control to management on issues such as claims administration, safety programs, and loss control.
Captive insurance for trucking companies is a smart alternative risk strategy for savvy business owners. Keep reading to learn more about the powerful ways in which captives are helping trucking companies thrive.
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Have questions? Call Capstone at WEB_TEL, or submit your information via the form. One of our experts will be in touch. We’ll discuss how we can help you or your client form a captive insurance company to insure the risks of your trucking business.
Fund Losses, Fight Trucking Risks
One of the major risks trucking companies face is auto liability. Over the last 10 years, bad underwriting results and low investment returns have resulted in increasingly higher rates and fewer insurers in the market. Physical damage to trucks and cargo, and workers’ compensation have also been very difficult coverage lines for trucking companies. Unexpected fuel cost hikes and labor shortages can also chip away at a company’s earnings. In this uncertain environment, trucking companies are increasingly turning to captive insurance planning to stabilize operations.
By forming a captive insurance company, business owners in the trucking industry can write comprehensive coverages that can keep their businesses resilient. Here’s a sample of various other coverages that may be written through a captive insurance company:
- Auto Liability
- Physical Damage to the Fleet
- Motor Truck Cargo
- Equipment Breakdown or Engine Repair
- Commercial General Liability
- Pollution Liability
- Weather-related Business Interruption
- Cyber Risks
- Employment Practices Liability
So here’s how it works:
- Option A - Trucking companies implement a large deductible ($50,000 to $500,000) with one or more commercial insurance companies and then underwrite that deductible in the captive insurance company. Funds accumulate inside the captive to pay the losses within the deductible layer.
- Option B – Trucking companies work with a commercial insurer to purchase the necessary insurance policies and then reinsure one or more layers with the captive insurance company. This is a more sophisticated option, but allows the trucking company greater flexibility in designing the coverage layers.
Moreover, if the loss experience is good over time the retained earnings can be distributed as a dividend or as a secured loan back to the operating company. Business owners have better control over their risk management efforts, more comprehensive coverages, and a more advantageous planning solution.
Bottom line: Captive insurance for trucking companies is a powerful alternative to commercial insurance alone. Savvy business owners in trucking who form their own captive insurance company can count on a new level of risk management, as they combat risk in such a competitive industry.
Attorney-led Captive Planning For Trucking Businesses
Capstone is the most integrated and largest outsourced provider of captive insurance services for the U.S. middle market. In association with The Feldman Law Firm LLP, Capstone offers platinum level attorney-led captive planning and administers property & casualty captive insurance companies that provide alternative risk financing services throughout the U.S.
Now in its CAP_YEARS_SUPER year, Capstone provides turnkey services to businesses in many industries, including trucking, under a joint engagement with The Feldman Law Firm LLP.
Unlike most other captive management companies, Capstone’s turnkey service providers do not disclaim tax and legal support. The company 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 insurance professionals includes Chartered Property & Casualty Underwriters, Associates in Risk Management, accountants and administrators, in addition to the affiliated The Feldman Law Firm LLP's tax, corporate, financing and regulatory lawyers, and outside CPAs, risk managers, property & casualty professionals, and actuaries.
Together, this team offers middle-market companies the most comprehensive risk planning solution available.
Call Capstone at WEB_TEL or submit your information via the form. One of our experts will be in touch. We’ll discuss how we can help you or your client form a captive insurance company to insure the risks of your trucking business.
Learn More About Captive Insurance
- Get the basics. "Captive Insurance Explained in Plain English" provides a simple overview of how captives work without the industry jargon.
- Want a little more depth on captives? Check out our Captive Insurance page for more information.
- See captives in action with "7 Ways Businesses are Using Captive Insurance."