Alternative Risk Management Solutions
FOR BUSINESS LEADERS
INSURING HIDDEN RISK
Most business owners unknowingly self insure a large amount of risk. Many of these are hidden or “below the surface” risks inherent in the operation of a business.
Any material risks can be insured.
If insurance claims are as projected, the reinsurance company may retain profits that can be distributed to its owners.
FORWARD
For many years, large corporations have used alternative risk transfer strategies to augment commercial P&C policies, reduce insurance costs, mitigate claims and improve risk management. With the changing dynamics among traditional property and casualty insurance companies, these benefits are even more important to middle market companies, as well as groups and associations.
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A POIC insurance platform is the premier risk management and risk financing tool. For forward-thinking companies, managing and financing risks (as well as protecting assets) have become important aspects of overall business strategy.
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We invite you to review this website and contact us to discuss how your organization can obtain the benefits of a POIC insurance company and other alternative risk transfer vehicles.
Asset Protection
As with other insurance company structures, properly-formed POIC have many asset protection benefits.
POIC Benefits
Risk Management
Conventional insurance typically provides little incentive to improve risk management, as there is no participation in the profitability of the insurance program. However, with a POIC, the business will benefit from good claims practices and experiences. A POIC provides strong incentives to improve risk management throughout an organization.
Taxation
Insurance companies follow special rules with respect to taxes. Statutory tax benefits are available to all insurance companies, including POIC's. Tax benefits alone, however, should not be the reason behind establishing a captive insurance company.
Cost Reductions / Capture Underwriting Profit
Typically, 35% - 50% of the premium paid to a commercial insurer goes to overhead and profit.
Unavailability of Coverage
POICs make sense when and where the commercial market is unable to provide coverage for certain risks (including warranty, reputation, regulatory, product liability, business interruption risks), or where the price quoted is unreasonable (such as medical malpractice or construction defect).
Cash Flow Benefits / Investment Income
Apart from pure underwriting profit, POIC's earn investment income on the premiums received. Premiums are typically paid in advance while claims are paid out over time. The POIC retains control over the premiums and surplus.
Underwriting Stability
A POIC insurance company is less vulnerable to the cyclical nature of hard and soft markets that affect the conventional insurance market. Thus, a POIC can aid a business that requires accurate financial projections.
POICs CAN LOWER THE COST OF TRADITIONAL P&C INSURANCE
Once a POIC has been established, the business owner (insured) can self-insure their uninsured and under-insured risks. it is common for the insured business to adjust premium and deductibility with their commercial P&C.
Call one of our representatives to explain a use case where one of our clients saved more than $900,000 in this real market scenario.
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CONTACT US
For any general inquiries, please fill in the following contact form:
CONTACT
REINSURANCE SPECIALTIES™
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