Are you worried about worker’s compensation? We’re here to help you better understand the systems in play.
Now that we’ve looked at the traditional market, what other options are available for business owners? This time, we’re looking at a Captive Insurance Plan.
Who the plan involves: Several business owners, a captive insurance company created by these businesses.
What is a captive program? If a business has specific and complex worker’s comp risks, they opt to form their own captive insurance company. There is usually a pool of 4 to 6 business that put their money together to fund it. This approach can be more profitable for everyone involved, but if there are any comp claims, all of the companies suffer.
Pros: Flexible, specialized, privately-owned, potentially huge profits, lower rates
Cons: Since all involved companies share risk, two or three big claims can damage the profitability of the captive insurance company. This kind of plan is only beneficial if your company is paying over half a million dollars per year.
Bottom line: Unless you have a particularly complex kind of business that would benefit from having non-standard worker’s comp, this probably isn’t the plan for you.
Next time, we’ll talk about High Deductible programs.
William Hollar works for PEO Select – a fast-growing company that connects businesses all over the U.S. with a PEO ideal for their needs.
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