How to Determine if a Captive is Right for Me? [Quick Quiz]

Written by Winter-Dent | Jan 21, 2021 7:47:00 PM

You’ve heard about captives and your curiosity is piqued. The natural next question is “should my company take advantage of this option?” The answer is a solid ‘maybe.’ Our extensive experience with captives has given us the unique ability to determine if a captive could be the right solution for you to explore for your business. As a result, we’ve created this quick evaluation to help identify your business’ current readiness or potential for moving to a captive in the future.

The question isn’t really about whether or not a captive is beneficial...the question is whether or not your business is ready for one. Experience tells us that when a business fits within a few key criteria, it creates a framework within which participation in a captive makes sense. Those criteria include things like company size, financial stability, claims history:

Loss History

If your company’s losses are historically low, and you're still experiencing annual premium increases, then a captive may be an excellent option. Ask yourself if you’ve made changes to your risk management practices that you don’t feel an insurance company understands or rewards you for the effort.

Risk Coverage

Companies with cost-prohibitive premiums where commercial insurance is no longer an attractive option can benefit from a self-funded option using a captive layer to bring those costs back into balance. Ask yourself if the type of coverage you need is available, but the premiums are typically high.

Risk Comfort

If your business is risk tolerant enough to budget and plan for unexpected losses, then a captive is likely a good fit. There’s always the risk of a high claim, and proper protections are in place to help, but it’s important to ask yourself if your company is financially stable enough to comfortably handle a higher risk threshold.

Designated Management

Captives require a level of expertise and dedicated attention to regulatory rules and guidelines. If your company has a project manager that can take on that role, then a captive is likely a good fit. Ask yourself who that person would be, and if they have the bandwidth and skill sets to take on the role of plan management. If you don’t have somebody identified, would you be in a position to make a hire?

Employee Programs

In order to proactively enter a captive, it’s important to arm your employees with the ability to manage their health positively. Programs are available that outfit your team with the tools and resources necessary to reduce costs and improve the health and satisfaction of employees.

Company Leadership

Last and perhaps most important, is your company leadership progressively minded and willing to handle an out-of-the-box health insurance solution? Ask yourself if your leadership team would value the benefit that a captive can bring to a company long-term.

We can’t say it enough...a self-funded health plan using a captive is a tremendously innovative and advantageous solution for health insurance...for the right companies. An honest assessment of your business’ position as it relates to these 6 areas will help gauge whether or not it's the right fit for you. It can provide significant advantages for long-term cash and risk management for the right company. This quick evaluation will help you determine your business’ readiness.

Simply click the link below to complete the questionnaire - it's quick...will take you less than 60-seconds to finish. We’ll send you an email with your answers, and one of our experts in captives will be in touch by phone to briefly discuss the results.

Or...if you want to learn more...download our free ebook "Everything You Need to Know About Captives."

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