A: The suitability of writing various lines of coverage through the captive depends on a number of factors, but in general:
To qualify for a captive, the premium should be $1,000,000+ for the line of coverage being evaluated. For a multiple line captive, total premium should be $2,000,000+.
Traditional Coverage by Industry
A: For a fee, a rated carrier will provide what is known as a “front”. The fronting carrier provides their name for the policy to satisfy the lender’s requirements. The premium and the risk are “ceded” to the captive through a reinsurance agreement.
See Glossary Definition: Fronting Carrier
A: You decide how much risk you want to retain. Through reinsurance agreements and excess policies, Risk Management Advisors can tailor your insurance company’s exposure to meet your comfort level and objectives.
A: Today there are over 5000 captives worldwide. Over 40% of major US corporations and many of your smartest competitors have one or more captives. Verizon, UPS, Centex Homes as well as many others utilize these unique companies.
The strongest periods of growth for captives occur as builders respond to hard market insurance environments.
A: Risk Management Advisors will provide a turn key program to design, implement and manage your insurance company. This will allow you focus on running your company, while we help you fulfill your objectives for entering the alternative risk transfer market.
A: A feasibility study is important because it answers the essential question; “What will my return on investment be by using a captive?” Prospective shareholders of the captive should have a clear understanding of what to expect when their capital is used to establish an insurance company.
Once the strategic purpose for a captive has been established the feasibility study is conducted to determine the pay back period and rate of return on capital deployed and to answer the key organizational and operational questions that will have an impact.
A: The focus of the study will depend on the motivating factors for establishing the captive. In general the feasibility study is a financial and risk management analysis that will always contain the following:
The study later becomes, in essence, the business plan for the captive with actuarial support for the loss assumptions, a description of how reinsurance will function behind the captive and how much capital will be required to make the captive financially viable.