As the market hardens, is it time to consider a Captive Program?
Home|As the market hardens, is it time to consider a Captive Program?
Globally, rates are on the rise. It may be time for you to consider alternative risk financing.
Rising insurance rates is currently an international problem. Across all lines – regardless of efforts to minimize risk – risk managers are still seeing price hikes and restrictions in terms of the coverages they are offered.
Oliver Wild, president of French risk management association AMRAE, thinks that the solution may be found in forming effective captives. It can be hard to create a captives in many countries due to legislation and conditions – so many people are forced to look internationally to find an effective captive for their risk. Oliver is urging governments to “help companies invest in risk management and to allow them to self-insure, because the market is not responding—and the government should be pushing the insurance market to respond and make sure that we have the capacity to build a bit more resilience into the economic tissue.”
He adds that while some companies use captives purely as a financial mechanism, they also have a lot of value as way of checking the effectiveness of risk prevention plans. Self-insurance is a great dashboard to monitor the effectiveness of your risk management—but we need the insurance and reinsurance market to be there as well to build that tower of risk management.
The insurance part of this picture is currently causing a problem. In Wild’s view the rate increases happening in the insurance market are “indefensible and risk alienating insurers from their clients”. Wild sees a dangerous disconnect emerging, where companies that are doing great work to mitigate risks, and have a good claims history with decreasing claims, are facing huge increases in their premiums. With that in mind, he believes it’s not just the larger companies that need to be able to embrace captives; shared captives for smaller companies are going to gain importance too.
Whiteboard would be happy to help you find a way to cover your risk outside of the standard markets. Whether this be a PEO, Captive program, or Self-Insurance plan – we can make sure you’re in the most efficient place for your particular risk.
To view the full article: https://www.captiveinternational.com/article/insurers-need-to-spend-more-time-with-risk-managers-and-think-about-captives