Owners of businesses, entrepreneurs, and stewards of large organizations are always looking for effective ways to cut down costs while improving performance. Enterprise risk management is one aspect of an organization that gulps a large amount of the costs in an organization. It is wise for companies to seek for uniquely designed solutions for enterprise risk.
We advise our clients to do risk transfer by creating captive insurance structures that can mitigate risk in commercial activities. Apart from reducing how much is paid as insurance expenses, captive insurance arrangements are typically deductible, which means that organizations can have access to larger annual deductibles.
It is common for small firms or even individuals to wonder why the cost structure of a large corporation is usually lesser than what should have been obtainable. This is because smart firms are now using private insurance solutions created by their captive management partners like us. They tend to enjoy the advantages of strategic risk management solutions while improving their performance.
Any organization that has tested the private insurance program management of captives won’t want to go back to using conventional insurance coverage.
Reasons Your Company Needs A Captive Structure
When your organization has a captive insurance structure, it means that it has its own insurance company that handles its risk management.
An organization that keys into owning its insurance vehicle, tends to save up on agent commissions, marketing, ads, and so on. These could translate to massive savings, which can be used by the organization that owns the captive structure.
Apart from that, owning a captive insurance platform means that you are able to protect your company from paying a lot to have access to coverage for those risks that are considered expensive by conventional insurance firms.
Another reason many companies are embracing this structure is that they are unable to get unique coverage for some types of risks from conventional insurance companies. Owning a captive structure is a win‐win for any company that knows its onion. What the company needs to do is to partner with astute captive management partners like us to customize solutions for their risk needs.
Benefits That Will Accrue To Your Organization Under The Captive Arrangement
• The parent company will have access to tax deductibles on the insurance premium that was given to the captive structure.
• The organization will have access to a lot of tax savings benefits. The parent and the captive will have access to income tax savings, which many organizations crave. Apart from that, the shareholders can embrace the benefits of gift and estate tax savings.
• The organization will be given the leeway to garner wealth by using a captive. For those organizations that want to protect their assets, the captive may be the right for them.
• We advise our clients to use the captive system because distributions can be given to them at favorable income tax rates.
• One thing every company wants is to have their assets protected against the claims from either personal or business creditors. When a company uses our help to create a captive structure designed for itself, it stands to gain this.
• An organization that uses a captive structure tends to pay far lesser in premiums compared to its counterparts that do not.
• When our clients use a captive structure, they can benefit from the reinsurance market that costs next to nothing.
• Some organizations are unable to get proper insurance coverage for some risks. The captive structure offers them.
• The organization has access to underwriting flexibility. When a captive structure is opened, marketing costs, advertising costs, overheads and other types of costs are saved as types of underwriting profits. These profits can then be used by the organization that owns the captive structure.
• The organization will have access to increased coverage. The truth is that a lot of traditional insurers do not offer the specialized and intense coverage that some companies need. The coverage that they may offer may scratch the surface at best. A captive structure will offer your company a better coverage compared to conventional insurers. Our feasibility analyst team will look at your business structure and seek for the right captive structure for your organization.
• Your organization can make purchases based on need. Instead of taking out a conventional insurance coverage that is not needed for one reason or the others, a captive structure allows companies to use only what they need.
• Utilizing a captive insurance structure means that organizations can look at their risk exposures. They can find out what is making them lose money.
It is then easier for them to adopt better risk management techniques.
Different organizations may need a captive structure for one reason or the other, but the different reasons usually boil down to one. They want to clamp down on their cost centers. We can help your organization create the right captive structure based on its needs.