Single Parent Captive InsuranceFor Healthcare and Senior Living Facilities
What is a Single Parent Captive?
Single Parent Captive Insurance, also known as a pure captive, refers to an arrangement where a single organization forms its own insurance company, or a ‘captive’, to finance its risks. This setup allows the parent organization to have complete control over its insurance program, including what risks to cover, how to manage claims, and how to invest its funds.
What Specific Insurance are Single Parent Captives set up to Cover?
Single Parent Captive Insurance can be tailored to cover a broad range of risks according to the specific needs and risk profile of the parent organization. For healthcare and senior living facilities, single parent captives could cover professional liability, general liability, property damage, workers’ compensation, and even specific risks not typically covered by traditional insurance providers.
What Kind of Organizations are Single Parent Captives Suited to?
These structures are well-suited to organizations with a substantial cost of insurance and a willingness to take on the responsibility of managing their own insurance. It’s particularly beneficial for healthcare and senior living facilities, which face diverse and significant risks and can benefit from the flexibility and potential cost savings a single parent captive can provide.
It’s usually recommended that organizations familiar with the captive environment start a Pure Captive, while those new to this type of self-insurance may prefer to start with a Protected Cell or Segregated Cell Captive
What are the Advantages of Single Parent Captive Insurance?
By self-insuring, organizations can potentially achieve substantial savings on insurance costs. Additionally, since the captive is owned by the parent organization, any underwriting profits or investment income can be retained within the organization.
Enhanced Risk Management
With a pure captive, organizations take on an active role in managing their own risks, leading to heightened risk awareness and improved risk management practices. The conversation around risk management becomes more focused on the savings potential rather than just the costs.
Improved Safety Outcomes
A greater focus on risk management can lead to improved safety outcomes. For healthcare and senior living facilities, this means creating safer environments for patients and residents, which can result in fewer claims.
Greater Control and Flexibility
Single Parent Captive Insurance provides organizations with complete control and flexibility over their insurance programs. Coverage can be tailored to meet unique needs, and changes can be implemented quickly to adapt to evolving risk landscapes.
Continuity in Programs & Premiums
Traditional Insurance providers will adjust premium costs and even stop offering coverage when they wish to reduce their exposure in a particular venue. By self insuring, organizations can avoid this constantly changing landscape.
How Much Does a Single Parent Captive Cost to Set Up?
The cost of setting up this type of captive can be considerable, often requiring significant initial capital, legal and consulting fees, and regulatory filing fees. These costs, however, can be offset over time through reduced insurance premiums and improved risk management.
How Do We Get Started?
Setting up a single parent captive involves multiple steps, including conducting a feasibility study, creating a business plan, capitalizing the captive, and navigating through the regulatory process. It’s crucial to work with an experienced professional in the field.
Michael Richards of Westwood Insurance Group has extensive experience in setting up single parent captive insurance companies for clients. His expertise can guide you through the process and ensure the successful operation of the captive once it’s established.
Contact Michael Richards now
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