Captive insurance companies can provide many business planning benefits over traditional insurance companies, such as risk coverage, federal tax incentives and asset protection, according to captive insurance management firm Capstone Associated Services.
The firm made the statement in a blog published on its website. It also claimed that captive insurance firms provide the opportunity to loan retained earnings back to an affiliated operating company from the captive during favourable loss conditions and provide business owners with a powerful business planning tool.
“Insurance needs are met with comprehensive coverage and in the event that premium revenue exceeds claims, owners benefit from the profits of their own insurance,” said the firm.
As well as business planning benefits, Capstone claimed that captive firms can also offer specialised coverages and provide more control over the claims process.
“Natural disasters such as hurricanes Katrina and Sandy put a spotlight on some conventional insurers that were slow to respond to claims.
“These problems might have been avoided with the help of coverage provided by a captive. Denials based on the bad-faith claims processes of some commercial insurers are eliminated when you own your own insurance company.
“When a loss occurs, you have the power to file a covered claim and receive payment without undue delays. Businesses that form captive insurance companies are resilient because they have planned for losses and they control the process,” said the firm.
Capstone Associated Services, North America