THE MIDDLE MARKET SOLUTION
A Producer Owned Reinsurance Company (or PORC) is an insurance company that re-insures the risks of its owner, affiliated businesses, or a group of companies.
THE VALUE PROPOSITION OF FORMING A PORC INCLUDE:
A business with large workers compensation or general liability deductible can use a captive to establish a self-insured retention (SIR) layer for that risk, immediately recognizing a tax benefit. The premiums paid to the large insurance carrier are reduced because the deductible is collateralized.
PORCs can re-insure employee benefits such as health insurance, executive retirement programs, group term life and long-term disability, achieving substantial cost reductions to the business.
PORCs can re-insure a business' product or service through a warranty. This represents classic risk management strategy following decades of application in the auto industry.
PORCs can cover uninsured and under-insured risk exposures not covered by a commercial Property and Casualty Insurance organization. In the best captive models, licensed, third-party actuaries are used to identify/qualify clients' risk profiles using centuries of actuarial tables; these risks may include business interruption, legal risks, reputational risks, key man risks, loss of key customer risk, loss of key vendor risk, and more.
THE PURPOSES OF FORMING A PORC INCLUDE:
Specialized coverage, such as business interruption insurance or comprehensive directors and officers coverage, can be obtained at reasonable and consistent rates.
Creditors & Finance
Creditors and Finance organizations can underwrite creditor/insured coverage such as:
Vender single interest
Other credit risks and additional self-insured risk.
PORC's can re-insure expensive construction defects, mold, and other construction-related general liability risks, thereby improving cash flow and profitability of the developer.
Hospitals, physician groups and medical professionals can self insure all or part of medical malpractice risks, obtaining underwriting profit, and achieving better loss and claims control.
Large property holders can use a PORC to re-insure completed coverage or differing layers of property coverage, thereby reducing overall insurance costs.
PORC's can re-insure non-traditional insurance coverages, including: equipment maintenance warranty, credit life and disability, employment practices, credit risk, post-retirement medical benefits, private mortgage insurance, extended-service warranty, voluntary employee benefits such as supplemental life, pollution liability, and medical stop-loss.