Did you know that 3.2 million Americans filed for unemployment benefits during the week of March 21, 2020?
The COVID-19 epidemic has caused and is continuing to cause unprecedented economic disruption globally.
If you are a business owner, you are no doubt interested in risk management. How can you ensure that you can accurately protect yourself and your assets against unexpected events?
Why not take a minute to learn more about how captive insurance companies could help you.
What is Captive Insurance?
Captive insurance is a method of insuring risk that many mid to large-sized companies use. It involves essentially setting up a small insurance company or department within your business. This company will then provide insurance for the parent company and possibly subsidiaries.
A captive insurance company can provide tailor-made solutions for companies that can meet their unique needs. What are some situations when Captive Insurance performs better than other insurance types?
1. Black Swan Events
A Black Swan Event is an event that is difficult or impossible to prevent and thus insure against but that has a large impact on your business. COVID-19 is a perfect example of a black swan event. It was not possible to foresee it more than a few months ahead of time but it has a devastating impact on economies globally.
If you have normal commercial insurance you may have to find yourself negotiating with your provider regarding insurance payouts. However, if you have captive insurance you are able to set the terms and conditions of each premium.
Following such an event you may find it difficult to find an insurance provider if your industry has been impacted by the event. however, as long as you have the inhouse capital to meet your insurance needs, you can immediately insure yourself with captive insurance.
2. Custom Employee Benefit Packages
When an external company is managing your financial risk, you have very little flexibility in how you care for your workers. Essentially you are subject to the terms earlier agreed.
However, when you have captive insurance, you will be able to create benefit packages that are bespoke to your current situation. Workers may choose to accept a package that has less of one advantage in exchange for more of another. This can prove to be financially beneficial for the parent company and the workers.
3. Create Your Own Risk Management Structure
Global insurance prices are volatile. They are impacted by events across the world that may have little relation to your industry. When you work with an external insurance contractor you are always subject to these elements no matter how small the ripple.
Captive insurance allows you to consider what your real-time needs are, the exact risk associated with your assets at a very granular level, and define the premium on the basis of this.
Successful Risk Management and Much More
Risk management is more than simply managing costs and lowering insurance premiums. Responsible risk management protects your reputation and ensures that subsidiary parts of your operation are covered at the times when you need it most.
If you are interested in learning more about business and insurance developments, then we are here to help. We gather the latest information and share it via our feed. Why not take a minute to see how we can help you today.