What are the Advantages and Benefits of an Alternative Risk Financing program?
The advantages and benefits of creating a captive include affordability, availability, stability, coverage flexibility, direct access to reinsurance, claims handling control, underwriting control, sharing in underwriting results, and improved cash flow benefits. Affordability: The high cost of medical professional liability insurance is an example of the problem encountered by purchasers of traditional commercial insurance. By forming their own insurance company and setting rates based upon their own relatively favorable experience, medical professionals can reap the benefits of lower premiums. Also, there are often expense savings associated with captives that may be result in lower premiums than would be available in the traditional market. Availability: Forming a captive is a proactive approach to eliminating the recurring problem of coverage unavailability. Control of coverage terms and conditions passes from the hands of traditional commercial insurers to the owners of the captive
