What's Your Exit Strategy?
Every captive insurance company needs an exit strategy. Whether it's distribution, sale, or shutdown, planning your exit from day one maximizes long-term value.
Begin with the End in Mind
We face many risks each and every day of our lives. It seems as though there is insurance for nearly all types of risk, yet some risks are uninsurable and some risks must be self-insured. Business owners have additional risks most individuals do not share. Some of these risks are required by law to insure, such as health, general liability, or workers' compensation.
At ALINK Captive Insurance Services, we specialize in risk management: the practice of appraising and controlling risk using various strategies — in fact, the best strategies to reduce risk.
Understanding Captive Insurance
An 831(b) micro-captive insurance company is one of those strategies. As you learn what a captive insurance company is, what it is not, and how to create, maintain, and eventually shut down your captive, as well as the multiple layers of benefits of insuring risk, you may feel overwhelmed by all the information being thrown at you. We're here to proactively train you in strategies that can be effective for your business, so ask all the questions you need to.
Captive insurance, also known as "CIC," has been around for over 70 years. Although they may be new to you, there is an entire CIC world around us. Most Fortune 100 companies have CICs. Most auto dealerships have one set up for their warranty work. A large number of hospitals have CICs to insure the many risks inside their buildings.
The Growing Opportunity
Because the cost of administering a CIC has dropped considerably through the years, many small-to-mid-sized, successful, privately-held businesses have been exposed to the benefits of captive insurance. As a result, more businesses are and should benefit from these insurance companies and the exposures they cover.
The Risks You Can't Ignore
What is the risk your business will be affected by a pandemic, or have interrupted cash flow, or one of your sub-contractors goes out of business leaving a significant deficit in your accounts receivable? These are the very risks you don't have control over, and they should be insured. These are examples of high-severity, low-probability risks.
We hope you never have to make a claim as a result of these types of losses, but knowing you have that option is the first step to protecting your business. What if your business collapses? There is insurance for every one of these scenarios.
Insurance Is the Antithesis of Risk
Insurance is the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
Is it risky? Insurance is the antithesis of risk. Captive insurance reduces risk and is your link to security for you and your business.