Captives can transform the corporate culture of the parent
Having a captive can change the mindset and corporate culture of its parent company, according to John Alberici, chairman of Alberici Corporation and president of Contractors Casualty Company, its Vermont-based captive.
Alberici told an audience at VCIA’s conference that because captives put the company’s own money at stake, there is more incentive to drive down costs.
Employees know savings can be used to invest in new equipment or training, for example, and will not end up in the pocket of an external insurance company.
Alberici said a powerful motivator for creating a captive is taking control of the claims process. When using the commercial market the insurer had complete control of claims, but the insured was responsible for 90 percent of claims expenses, he said. Creating a captive could reduce the time for claims to be processed from seven days under a commercial arrangement to minutes under a captive, he added.