So, you’ve read our post on taking control of your insurance, and now you’re looking into captive insurance as a solution. However, simply Googling “Captive Insurance” leads to around 2.8 million results, which leaves a lot of room for misunderstandings.
In this post, our aim is to debunk the most common transportation captive myths.
#1 Captives are only an Option for Fortune 500s
Captive insurance is becoming more accessible than ever for small- to mid-size transportation businesses. While the cost to start one’s own captive may not be feasible for smaller companies, more and more are turning to rent-a-captives where a company would “rent” space from an existing captive.
#2 All Captives are the Same
According to the National Association of Insurance Commissioners, there are five common types of captive insurance companies: Single-Parent Captive, Group Captive, Association Captive, Rent-a-Captive, and Risk Retention Group. Each captive type varies in structure and membership.
Click here to learn more about the different types of captives.
Furthermore, captives are oftentimes established to provide coverage for difficult risks. In fact, practically every risk underwritten by a commercial insurer can be provided by a captive. Therefore, captives not only vary by structure, but also by niche.
#3 A Transportation Captive is Expensive
While its true that there are a lot of upfront costs for captive insurance, these initial costs should be viewed as an investment. Captive insurance is generally part of a company’s long-term strategy, wherein the investment into the strategy typically generates a return in three to five years.
If your company is suffering from rising insurance costs or is having a hard time obtaining certain types of coverage, then forming your own captive, or joining an existing captive, may help alleviate your company’s woes.
Truck Writers acts as a Third Party Administrator (TPA) for a truck insurance group rent-a-captive, as well as a workers’ compensation self-insurance program. To learn more about our insurance offerings, please contact an agent today.