CDRA company member Marsh McLennan Agency is well-versed on captive insurance opportunities. Here are some guidelines to learn more about options and if your business qualifies to be part of a group captive for insurance coverage.
Marsh’s Position
Marsh is the leader in the Group Captive market. With over $500 million in group captive premium paid by over 600 of our clients and access to more than 50 group captive serving a wide variety of industries, we have a group captive home for most high performing, well run companies.
Who Qualifies for Membership?
- Safety conscious companies with superior loss experience
- Financially stable
- Entrepreneurial and a desire to take control
- Paying at least $150,000 in primary casualty premium
What Does Group Captive Membership Get You?
- Greater market stability and control over insurance costs
Insulation from insurance market cycles
- Superior loss control and claims handling
- Opportunity to capture underwriting profits and investment income
- Opportunity to network with similar hand picked companies who share the common goal of becoming a safer, high-performing company
Key Benefits to Membership
- Cost control, cost smoothing: Members see more stable pricing over time because individual account pricing is based on their own loss experience rather than the market conditions or subsidization of poor risks.
- Superior loss control and claims handling: Service providers are chosen by and accountable to the members. These services are designed to prevent accidents and reduce claims costs, thus increasing profits for the members.
- Ownership: Each member is a shareholder, serves on the board and participates in the decision making regarding operational matters
- Profits: Are distributed back to members based on individual loss experience. The profits are usually quite significant for the well performing members.
- Financial Stability: All policies covering members are issued by insurers rated “A” or better by AM Bests. That insures regulatory compliance, counter-party acceptability and security.
What is Different About Group Captive Insurance?
The simple answer is not much on the surface. Certificates of insurance, policies, auto ID cards will look the same. No one outside the client will notice a difference.
Behind the scenes the arrangement is structured so that the captive retains the first layer of claims and the necessary loss funding and reinsurance protects against the catastrophic claims.
The member must purchase their stock in the captive (usually between $10,000 and $36,000 depending on the captive). This facilitates their vote and profit return.
The member must provide some collateral to insure collectability and minimize credit risk among the members for potential assessments if that member’s losses exceed initial loss funding.
Members participate in the captive decision making process at semi annual board meetings held outside the USA and Risk Control Workshops that are held inside the USA.
Attendance at the meetings is strongly urged so the member will become engaged in the process and to better understand the business of which they have become part owner.
