Businesses today are required to carry a number of insurance policies, including things like general liability, property and casualty insurance, workers compensation, and others dictated by individual needs or specific industries. If you find that your company is spending too much money every month on insurance and you are looking for ways to cut costs, captive solutions may be just what you need. Here are a few reasons businesses are considering captives.
Captives provide more control over the entire insurance process. Not only do companies within the captives have more control of the costs, they are also able to determine what types of coverage will be offered, and how the money collected will be invested. Captive members also set their insurance costs based on the performance of captive members, rather than market trends or broad industry averages.
If you have a business with more specific or highly risky insurance needs, you may find it difficult to get coverage on the open market. Either the insurance you need is unavailable, or the cost to obtain it is cripplingly high. In either case, some captive solutions may provide the coverage you need at a price that is usually more affordable.
Finally, captives can provide tax benefits to companies, most commonly through premium deductibility or deferred taxation of insurance income. Not all companies that are part of a captive will be able to take advantage of tax benefits, and it should not be the primary reason for considering one. Nevertheless, tax benefits can be a great advantage for some companies.
When you are ready to take control of your insurance process and even benefit from it, consider whether captive solutions are right for your business. Click here to get more information on this subject.