Who Qualifies to Own a Captive Insurance Company?

Profitability, Liability, or Mass

Every business, once it reaches a certain level of success in profitability, liability, or mass, should understand how a captive insurance company may benefit them. Every business is unique, and a captive insurance company is not for all businesses. However, for those businesses and business owners who are risk adverse, desire to control insurance expenses more efficiently, and preserve capital, captive insurance is not a question of if, but when.

What Level Qualifies?

Historically, only Fortune 100 or 500 companies could afford the expense of creating and maintaining these insurance companies. By the way, the majority of these companies have captive insurance companies today. In the last decade, administrators and regulators have become more efficient, and consequently the expenses have gone down, making captive insurance companies attractive for profitable businesses of all sizes.

Three Simple Indicators

Here are three simple matrices to quickly identify when implementation of a captive makes sense. A business does not need to have all indicators, but any one of the three:

• Revenue. Businesses with $500,000 or more in sustainable operating profits is a general rule of thumb in measuring feasibility. This measures profitability.
• Insurance. Businesses currently paying $1,000,000 or more in commercial insurance premium. This measures liability.
• Employees. Businesses with 200 employees or more indicate a pattern and size qualifying for captive insurance. This measures mass.

Your Business Is Unique

Your business is unique, and the very qualities which make you unique and profitable often become the very liabilities which should be insured. The key supplier, key employee, special contract or warranty your company provides, as well as a wide variety of risks which may interrupt your business, all may be insured through your own captive insurance company.

Business owners who qualify and implement coverage reduce risk, are more efficient, preserve capital, and in the process create their link to security.

Call 720-213-0583 to find out if you qualify.