Manufacturers should consider captives: CIC Services

29-01-2021

Manufacturers should consider captives: CIC Services

Manufacturing companies should consider using captives to fill gaps in their commercial insurance coverage, according to Randy Sadler, a principal with CIC Services.

An increasing number of manufacturing companies are pursuing captive insurance as a solution to the problems created by exclusions in policies that often deny coverage when it is needed most, said Sadler. The problem is even greater for asymmetrical threats like pandemics, where coverage is costly and difficult to obtain. 

A mood of nervousness is currently gripping manufacturers, due to uncertainties around COVID-19 and global economic lockdowns, making risk management a top priority. A survey by the National Association of Manufacturers found that 80 percent of manufacturers expect the pandemic will have a financial impact on their business.

“Businesses need to review their insurance policies to identify gaps in coverage—and to fill these gaps, captives can replace commercial insurance, insure enterprise risks, insure warranties, insure bonds, insure employee benefits or healthcare or any combination of these,” said Sadler. “Captives also provide a stronger business model, improved risk management, improved cost control, insurance profits, asset protection, asset accumulation and receive advantageous tax treatment.”

When assets in a captive are not paid out in claims or expenses, the owner keeps this profit, added Sadler. 

 

CIC Services, Randy Sadler, Manufacturing

Captive International