|
As we discussed in Part 1, Group Captives are a fantastic alternative to standard insurance programs and can translate to increased profitability for your firm. Here's how:
THREE INSURANCE LAYERS
Group captives often operate with several layers of insurance:
- "The Frequency Fund" - a layer of coverage that insures claims up to a certain amount
- "The Severity Fund" - a collective financing vehicle for claims that are higher than the threshold
- A third level of Commercial Reinsurance for claims beyond what the captive can bear
When a member joins and pays the premium, a particular amount goes into each fund.
Because of this setup, relatively small, controllable risks remain the responsibility of individual companies. If one company has poor safety practices that result in many small claims, the other members will not suffer. The frequency fund creates an incentive for members to reduce risks wherever possible.
Larger, less predictable claims are covered by the severity fund up to a predefined limit as with the frequency fund. In contrast to the frequency fund, however, the severity fund is pooled. Any claims made against it are paid from the pooled severity fund premiums for that policy year.
The third level of the midmarket group insurance is a Commercial Reinsurance policy. It covers claims above the severity fund limit. In addition, most group insurance programs have an "aggregate," representing a total amount of claims above which the captive does not pay claims. The aggregate limit is typically some multiple of the frequency fund and/ or severity fund premiums. This allows a predicable cost structure and overall protection for members and for the group.
Properly structured, the overall financial risk versus the substantial rewards that can be achieved are very real.
OUR SOLUTION
A principal business concept states that: "If you don't own it, you don't control it." The Gaudreau Group is one of the largest full-service independent risk management firms in the Northeast. We have been helping our clients protect and grow their business assets since 1921. In exclusive partnership with Captive Resources, the largest independent member-owned consulting firm in the U.S, we advance the Churchill Casualty Ltd. This insurance company was created to afford a customized, affordable insurance alternative to members who desire to gain increased buying power and the advantages of control that generally was afforded only to the largest insureds.
-Churchill is the Sixth Largest Member Owned Captive in the World. The Third Largest Heterogeneous Group Captive.
-Our size affords greater spread of risk and stronger performance profile (vs. some of the smaller captives who can be dramatically affected by performance swings
-Your premiums are actuarially based on your individual loss experience. Fundamental principle of controlling claims and controlling your long term cost. This means your past losses determine your premium, not state rates or manual premiums.
-All members are equal owners with true member only ownership. No service providers, including Captive Resources or the brokers have any ownership or voting authority.
-Lines of coverage in the captive can include: Workers' Compensation, General Liability and Automobile coverages. (Separate Group Health and Employee Benefits and Property Captive is Available)
-Members retain their individual unused loss funds and the investment income associated with those loss funds. (i.e. PROFIT!!!)
-Premium to Surplus Ratio: 0.35:1 (As of 2/28/10 Audited Financial Statement -Insurance Industry Standard 3:1 - this means exceptional performance and ability to bring stable value to members)
-Operating costs for Churchill are 27.8% vs. other group programs at 45.29% at SAME LOSS PICK.
-Retentions are very low for the risk assumed (our strength in numbers and reinsurance power allows this)
-Investment opportunity in a $1 Billion Dollar investment fund exclusive to Captive Resources administered captives
-Third Party Administration of claims, which allow for more control over claims handling, settlement and selection of counsel. More Control!!!
-Only the best risks are accepted. Better than average loss performance is critical. Premium versus losses, how do you stack up? Membership is reserved for companies demonstrating the highest controls for safety and claims management.
-Complete confidentiality of membership information. All company business is conducted through confidential member numbers.
-Predictable, Proven Strategy for Returning Profits and Closure of Underwriting Years- With the implementation of the Internal Rolling Tail Fund, our members have the ability to predictably close underwriting years and return profits. (Other programs hold the members hostage to the overall performance of the group. Very unpredictable)
-No hand-cuff clauses - A member can leave anytime they choose. Other groups have onerous clauses that limit one's ability to leave
-Absolutely no cost to investigate - other programs charge an actuarial and feasibility study that ranges from $28,000- $35,000
| 
