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A local company that specializes in providing analytical services for the aerospace industry has been in business for the past 50 years. The culture of the company was to encourage personal and professional development and the people who worked there flourished—to the point that many of the staff who had started at the company when they were in their early 20s and 30s still worked for the firm 50 years later. The employees as a whole were a pretty healthy group As a result, the company’s claims experience—which for many years reflected the typical life events such as pregnancies, broken limbs, various illnesses and so on—was quite good. Now, though, with the average employee age nearing 60, the company is finding its claims experience going through the roof. The past few years in particular have been extremely expensive, with more than a dozen employees undergoing major life-saving surgery. As the years wore on and the spike in insurance utilization continued to climb, the company found it increasingly difficult to obtain the coverage it needed at prices that it could sustain paying. The company did what it could, and reluctantly had to trim some coverage limits, increase deductibles and copayments, and increase the employee portion of the premium payments. Finally, after struggling to pay its share of the dramatic increase in premiums, management has decided that now is the time to take a look at instituting captive solutions for the company. A growing trend in the United States that offers more financial protection Taking this type of approach to self-insurance is becoming an increasingly popular risk management technique that companies are using to exercise more control over their insurance costs. In fact, some states (such as Vermont, Delaware, Oregon, and Utah) are actually revising their laws and relaxing some regulations in order to attract more captives to their locations. Oregon, for example, no longer charges premium taxes for this type of insurance provider; instead, the state simply charges them an annual $5,000 fee. Captive solutions can be shaped to offer flexible protection for a myriad of industries. Their success is borne out by the sheer numbers: more than 90 percent of companies in the Fortune 1000 as well as a substantial number of middle-market companies utilize this type of insurance establishment. To learn whether one’s company can benefit from this type of creative risk management approach, contact a professional insurance agent today.
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