Setting up a captive insurance company in The Bahamas has several important benefits. Captive insurance involves setting up a subsidiary or affiliated company that provides insurance to the parent company or group of companies. As a result, you do not have to obtain insurance from an outside company. This type of insurance company could help you manage risk, reduce your costs, and even protect you from some risks that most insurance companies do not cover.
Risk Management by Using a Captive
Not all businesses in a particular industry have the same risk profile. Unfortunately, market rates for insurance bind many businesses to paying more than they really should for unnecessary coverage, just because other industry businesses have higher risk. Captive insurance eliminates that price hike, because a captive insurance company can set appropriate deductibles for the actual risk profile of the parent company. This is one reason that medical organizations often use captive insurance.
Reductions in Cost by Using Captive Insurance
When you pay insurance premiums to a regular insurance company, your payments often include commissions to the agent. They also include money that goes to the insurer to cover its expenses. By setting up a captive insurance company, you control and possibly eliminate those costs. Any profits that the captive makes can be reallocated to other companies in the group if desired, instead of contributing to another insurance company's profits. Further, the company owners can control the investments that the captive makes, instead of premium dollars going to unknown investments in the hands of another insurance company.
Wider Availability of Liability Coverage by Using a Captive
Regular insurance companies simply will not cover certain types of risks. Captives, however, can be set up to cover nearly any kind of anticipated risk at a reasonable price. For example, your company may learn that flood insurance is largely unavailable in its area due to the high risk of flooding yearly. You could set up a captive insurance company to which your original company would pay premiums, to insure the original company against the risk of flooding.
Of course, flood insurance is just an example. If you are interested in capturing the benefits of captive insurance for your company, talk to a lawyer in your area about how to get started.
To find out more about captive insurance, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.
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