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.
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.