It seems like an ironic turn of phrase, does it not. Captive as opposed to being free. But more often than not, many small to medium sized business have been left stranded by their short term insurance service providers, whether they be local insurance agents, insurance company underwriters or loss adjustors or assessors after the fact. The fact of the matter is the loss or damage sustained after a calamitous event, natural or caused by man, that the insured was in no position to prevent. It happens, even after every precaution is taken to avoid such losses. Captive insurance industry staff respond a lot differently.
And they need not be conventional underwriters or loss adjusters either, although the roles of these professionals will remain important for the captive insurance industry. What is the difference between captive insurance and conventional commercial short term insurance services? Look at it this way. By the time you have suffered a loss, even if your business adhered to all risk management recommendations given by the underwriter, you always find that the estimate of your loss continues to be pared down.
The objective of conventional underwriters remains to pay out as little as possible. After all that you have paid in premiums, that hardly seems fair, does it? Captive insurance alternatives do, however, offer you that degree of fairness. Because it is your own funds that are being utilized to take care of losses or damage, should they occur. You are no longer paying the penalty for other companies’ more than acceptable losses. The captive insurance company manages your premium payments on your behalf.
There is freedom for you in this because you are enjoying more control and say over how your risks are being managed.