Insurance Management Takes Many Forms
Independent agency management companies can be found everywhere. With its tax benefits, large corporations have found that it a convenient location to establish the many captive insurers, which are typically run by independent insurance management companies. In just four short years the captive insurance company population in the island has risen from just 333 to over 734 from which $2.5 million is generated in yearly premiums. This increase is largely due to the fact that large businesses are not only finding the cost of providing insurance for their employees affordable but also a way to provide job security for their workers.
In this current economic climate every company is looking for a way to cut costs and increase profitability. In addition, with cutbacks and layoffs occurring across the board, companies are looking for ways to increase employee productivity and thereby reduce the amount of work that needs to be done to accomplish those goals. One such area in which insurance management companies have been gaining a lot of business is in the area of captive risk. With the large number of companies that are captive, there is a significant increase in the number of policies being written. This is because there is a great deal of work that needs to be done to determine the risks of insuring a particular business.
For example, if a company were to go completely without insurance, they would quickly begin to lose customers. The leading independent insurance management companies use a complex risk model to determine what risks a business may be exposed to. Once this information is obtained, the insurance company will then apply it to the various captive insurance companies that they work with. Many of these insurance companies will then provide quotes for policies based upon the risk exposure that the company's policies may face. Many times this will be determined by the volume and type of work that a company does.
In many instances, the independent insurance carriers
firms that works with the captive insurance companies will take a look at the reports that the companies submit to them on a regular basis. On these reports, the insurance industry is referred to as risk exposure. The leading independent insurance management firm then gives an assessment to the business about the level of risk that their policy might face. If a policy is rated too high, or if there is too much risk associated with insuring the business, the company may want to consider lowering the premiums that they pay for the policy.
Another way that businesses can take advantage of the services of a captive reinsurance company is through reinsurance. Reinsurance is when a company agrees to insure a certain number of shares of stock. The idea behind reinsurance is to protect the business against a loss due to a specific event. If there is a loss, the amount of money that the company receives from the sale of those stocks will cover the costs that they owe to the reinsurance company. The premiums that are paid to the reinsurance agent also take care of the expenses that the company would incur. In most instances, the premiums that are paid to these companies are less than what the business would have to pay if they continued to insure their own policies.
Overall, the insurance industry has been slow to adopt the use of reinsurance and to take advantage of the opportunities that it offers. For companies that are not familiar with the process, it is important to ask their insurance manager what they think the current risks being faced by the company are and whether they feel that they can afford to insure those risks rather than working with a reinsurance company. If the manager feels that it is possible to get all of the risks under control without having to resort to a captive, they should certainly start looking into it. An alternative post for more info on the topic here: https://en.wikipedia.org/wiki/Insurance