4 January 2016Actuarial & underwriting

Growing comfort with captive use

There is growing comfort with the use of captives, according to a new survey by Integro Re, the reinsurance segment of US-based Integro Insurance Brokers.

The firm’s annual survey saw the participation of 15 of the top insurance and reinsurance companies in the provider excess space.

It found that there is growing comfort with the use of captives, with approximately half of the respondents currently participating in conjunction with a provider owned captive.

The data also showed that higher retentions and the use of captives has also led to more risk being retained by providers rather than being ceded to the insurance market.

As well as looking in to captives, the research also found that growth in the provider excess insurance market has stalled in 2015. Total premium in 2015 is expected to be $167 million, which would represent a 3 percent drop from a total of $172 million in 2014.

Provider excess is an insurance product for health care providers who take on risk via capitation, shared savings plans or a bundled/episodic payment plan. Although payers typically offer protection from large claims in their risk contracts with providers, the provider excess market typically provides claims mitigation services and competitive pricing.

“Risk takers need to be educated on the stop-loss coverage embedded in their provider risk contracts,” said Peter Robinson, accident and health practice leader of Integro Re.

“The provider excess market will beat the payers on price and service nine times out of ten.”