What is the difference between high deductible plans and captives?
Warren Cleveland, ACI, CIC, AAI
We help independent insurance agents use captives with their best clients and prospects.
Insurance plans can be a complex and overwhelming topic, especially when it comes to deciding between different programs. High deductible plans and captives each has its own set of advantages and disadvantages depending on your specific needs.
High deductible plans involve renting insurance from a carrier, where the carrier sets the rate based on every member and requires collateral in case of losses. The deductible can be quite large, meaning you must be willing to take your losses in exchange for a lower premium. However, suppose you don't have claims. In that case, you can significantly lower your total cost of insurance, and you are not tied to the program year over year.
On the other hand, group member captives allow you to become an owner of the carrier, and your premium is determined by your performance, with a strong emphasis on safety and risk management. There is stability in your premiums because they are based on your performance and transparency in seeing where every dollar goes. However, collateral requirements and loss sharing are absorbed in the total insurance cost.
If you want to take control of your insurance premiums, it's important to consider your options and make an informed decision carefully.
To learn more about the differences between high deductible plans and captives, check out our video - https://youtu.be/P-47SKliT1o
And if you're ready for a free assessment of your insurance program, click the link below.