1. Control of Risk Dollars

The essence of risk finance is not to reduce premiums, but to make the process more cost effective and efficient.  That can only be achieved with control.  The insured/owner of a captive must work with the singular focus of controlling the money that is used for risk.

2. Reduced Insurance Costs

Reduced costs are achieved by the majority of captive insurance companies.  This is accomplished by the purchase of reinsurance rather than direct insurance.  A captive insurance company escapes the high sales, marketing and administration costs usually associated with commercial insurance companies.

3. Expanded Coverage or Limits

Often the coverage that is needed to meet commercial obligations and corporate responsibilities is not available, or is priced inefficiently in the traditional insurance market.  Likewise, sometimes limits required by lenders and others are not sufficiently available. A captive or risk retention group can meet those needs.  Properly organized and funded, a captive can offer any coverage or limits that are necessary, appropriate or desired.

4. Continuity of Insurance

Historically domestic insurance companies have provided coverage when it is financially attractive for them to do so and stop writing business when they consider the exposure too great.  Captives can insure their own risk thus ensuring continuous coverage.

5. The Need for Professional Insurance Coverage

Many insurance policies are standardized products, seldom drawn to suit the particular needs of the insured.  Similarly, the fundamental rating system used to assess premium levels is based upon recorded loss history on a specific industry or group basis.  The result is detrimental to an insured with a better than average claim record, or one who falls within a specialized field.  A captive can tailor a policy to meet particular circumstances and provide greater flexibility and reduced costs.