The he Ca Capti tive Alt ltern ernati tive Do Business - - PowerPoint PPT Presentation

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The he Ca Capti tive Alt ltern ernati tive Do Business - - PowerPoint PPT Presentation

Oct 16, 2023 209 likes •724 views

The he Ca Capti tive Alt ltern ernati tive Do Business Boldly De Defin finin ing T The Captiv ptive Finances risk Purpose to of owners or support Special Not licensed participants owners purpose to sell to (i.e.

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SLIDE 1

The he Ca Capti tive Alt ltern ernati tive

“Do Business Boldly”

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SLIDE 2

De Defin finin ing T The Captiv ptive

Not licensed to sell to general Special purpose insurer Purpose to support

  • wners’

business

  • bjectives

Finances risk

  • f owners or

participants (i.e. sophisticated Insureds)

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SLIDE 3

Contr

  • ntrol
  • l

Sta Stabi bili lity ty Oppo Opportun unit ity

Control premium costs and improve risk management. Find long-term financial stability. Reap the benefits of premium return and increase safety in workplace.

Captiv ptive B Benefits fits

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SLIDE 4

Benefits fits o

  • f

f Captiv ptive O Ownership ip

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SLIDE 5

Captiv ptive Ma Marketpl tplace

6400+ 6400+ captives worldwide 495+ 495+ new captive licenses issued in 2017 35+ 35+ states with captive legislation

Emerging markets in Latin America and Asia Pacific Consolidation

*Stats per Captive Review World Domicile Update, May 2017

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SLIDE 6

Com

  • mmon R
  • n Risk

sks s Insu Insured

Workers’ Compensation General Liability Auto Liability Health Benefits Professional Liability Property Cyber Liability Warranty Enterprise Risks Other Insurable Risk

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SLIDE 7

Types of C ypes of Captiv ptives es

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SLIDE 8

Group Captive Single Parent Captive

Type pes o

  • f C

f Captiv ptives

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SLIDE 9

Group C Captive

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SLIDE 10

Gr Grou

  • up Captiv

ptive

Captive

A group of companies that come together to form their

  • wn insurance company.
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SLIDE 11

Line nes of s of Coverage

Workers Compensation General Liability Auto Liability Auto Physical Damage

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SLIDE 12

Policyholder Agent/Broker

Insurance Company

You

  • ur W

r Worl

  • rld

d Toda

  • day
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SLIDE 13

Shareholder/ Policyholder Policy Issuance

$ $ $

Claims Loss Control Reinsurance

You

  • ur W

r Worl

  • rld

d Tom

  • morr
  • rrow

Oppor pportunit unity

Cont

  • ntrol
  • l

$

Investment Income Operational Improvement Underwriting Profit

Captive Agent/Broker

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SLIDE 14

Fun undin ing Str truc uctur ture

Retention

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SLIDE 15

Premiums $200k to $2.0M Desire Control Financially Secure Commitment to Safety Entrepreneurial Spirit

Idea eal l Group up Can andidat ate

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SLIDE 16

Singl gle P Parent Ca Captive

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SLIDE 17

Single P le Paren ent Captiv ptive

Insured/ Shareholder Captive

A captive with a single shareholder.

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SLIDE 18

Premiums >$2.0M Desire Control Financially Secure Commitment to Safety Entrepreneurial Spirit Risk Distribution Requirement

Idea eal l Single P le Paren ent Can andidat ate

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SLIDE 19

ICS CS Stati tistics cs

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SLIDE 20

ICS ICS Const

  • nstru

ruction St

  • n Stats

7 construction group captives 230 230 member companies 35 35 states (headquarters)

Exposure in all 50

50 states

$43 $437k 7k average premium

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SLIDE 21

Indu Indust stri ries R s Represe sent nted

General Contracting Street & Road Heavy Construction Masonry Mechanical/HVAC Electrical Excavation Utilities

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SLIDE 22

ICS ICS Const

  • nstru

ruction P

  • n Perf

rform

  • rmanc

nce

Ra Rate Reduc uction ion

Workers Compensation 19 19.8% 8% 5. 5.5% 5% 0.1% General Liability Auto Liability

*Companies in a captive 5+ years

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SLIDE 23

$254M $254M Distributions 30% 30% Loss Ratio

ICS ICS Const

  • nstru

ruction P

  • n Perf

rform

  • rmanc

nce

24 24% Return on Premium

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SLIDE 24

Ris isk Ma k Management

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SLIDE 25

Ris isk Ma k Management

Establish captive guidelines and best practices Semi-annual Risk Control Workshops Quarterly Event Learning conference calls Preferred vendor list Claims management & loss control

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SLIDE 26

Case se Stud Studies ies

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SLIDE 27

Case Stud tudy: Group C up Captiv ptive

Electrical contractor firm with multiple locations throughout the U.S. that joined a homogeneous ICS group captive in 2006.

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Group C up Captiv ptive Me Member Suc uccess

Return on Premium

35% 35%

$1 $1.38 38 MM

Returned to Date

WC Premium Rate Reduction

52% 52%

32% 32% Growth th

In Payroll From: 2006 - 2016

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SLIDE 29

Addi dding ng t to

  • the Bot
  • ttom
  • m Lin

ine

$0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 $1,600.0 $1,800.0 $2,000.0

Premium(Thousands)

Total Premium Total Premium at Inception LCF Premium Savings in Last Policy Year $1,050,258 Cumulative Premium Savings $5,038,203 Distribution Bonus: $1,375,260

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SLIDE 30

Exp xperi rienc nce Mod Si

  • d Sinc

nce J Joi

  • ini

ning ng Ca Captive

Mod Mod R Reduc uction ion 38% 38%

0.60 60 0.70 70 0.80 80 0.90 90 1.0 .00 1.10 10 1.2 .20 1.3 .30 2008 2009 2010 2011 2012 2013 2014 2015 2016

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SLIDE 31

Bei eing Proactiv tive

Risk Planning - Project Managers Analyze Jobs Potential Risk Job Pre-Qualification Requirements Extensive New and Ongoing Training

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SLIDE 32

Sta tayin ing Involv lved ed

Management Involvement in Captive and Claims Process Active RTW program with Employee Follow-up Safety Director Accompanies Employee to Doctor Visits

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SLIDE 33

Ca Case se St Study dy: Si Sing ngle P Parent nt

Large general contractor with strong safety records formed a single parent captive in 2003 to buy-down large deductibles to protect insured from the unpredictability of both the insurance industry cycles and their loss exposures.

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SLIDE 34

Risk sks Insu s Insured

Workers’ Compensation Deductible General Liability Deductible Auto Liability Deductible Health Benefits Stop Loss Builders Risk Reinsurance

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SLIDE 35

Si Sing ngle P Parent nt: Su Success St s Story

  • ry

Workers Compensation 40% 40% 38% 38% 73 73% General Liability Auto Liability

*2014 to 2019

38% Exposure Increase 79% Exposure Increase 79% Exposure Increase

Rate Reduction

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SLIDE 36

Ca Captive T Trends

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SLIDE 37

Emplo loyee ee Ben enef efits

Correlation between WC and EB Access to claims data Focus on organizational health and wellness Bonus: stable costs and talent management

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SLIDE 38

Employee Benefits Group up Ca Captives

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SLIDE 39

Wh Why Join in an E EB Captiv ptive?

Win in Good Years Stability in Bad Years Control Transparency “Cleaner Pool”

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SLIDE 40

 50-500 Covered Employees  $500k+ in Fully Insured Premium  Entrepreneurial Spirit  Desire Control  Care About Employee’s Health  Understand “Risk for Reward”

Wh Who is is a Good EB Group C up Captiv ptive F Fit? it?

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SLIDE 41

Case e Study 1: Emplo loyee ee Ben enef efits

A Mechanical Company with 175 enrolled employees joined an employee benefits group captive in 2015.

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SLIDE 42

201 2015 201 2016 201 2017 Tota tal Average Enrollment 174 176 176 526 Fully Insured Premium $1,271,850 $1,510,179 $1,545,026 $4,327,055 Expected Captive Spend $1,233,088 $1,423,721 $1,322,839 $3,979,648 Actual Captive Spend $1,436,729 $1,180,390 $1,313,060 $3,930,179 Captive Savings: Difference from Fully Insured ($164,879) $329,789 $231,966 $396,876

$1,000,000 $1,100,000 $1,200,000 $1,300,000 $1,400,000 $1,500,000 $1,600,000

2015 2016 2017 Fully Insured Premium Captive Actual Spend Expected Captive Spend

3-Year Captive Savings from Fully Insured:

$396,876

Membe ber r Ca Case se St Study dy

Fully Insured vs. Captive

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Case e Study 2: E Emplo loyee B ee Ben enef efits

A rock and concrete company with 90 enrolled employees. They were self-funded for 20 years prior to joining the captive in 2013.

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Membe ber r Ca Case se St Study dy

$7,380 $12,289 $6,260 $6,575 $5,003 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

201 013 201 014 201 015 201 016 201 017

Annual Cost Per Member

10% 10% Decrease Per Year Claims Trend Since 2013

Claims Trend Since Joining EB Captive

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SLIDE 45
  • 35%
  • 30%
  • 25%
  • 20%
  • 15%
  • 10%
  • 5%

0% 5% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

WC WC R Rates

Trend Since Joining EB Captive

10% 10% R Reduc uction tion in W in WC rates sinc ince joinin joining EB EB Captiv ptive

Joined EB Captive

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SLIDE 46

Step 1: Biometric Screenings

  • Employee & Spouse
  • Screening Options: Onsite, Lab or PCP

Step 2: At-Risk Must Take Action

  • 3+ Metabolic Risk Factors or Type II Diabetic
  • Mus

ust C Compl mplet ete e One of the Following Programs:

  • Naturally Slim or KrowdFit

Step 3: Tobacco Cessation

  • Tobacco Affidavit for Employee & Spouse
  • Tobacco Users to Complete Trestle Tree Cessation Coaching

Membe ber r Ca Case se St Study dy

$2,400 per year for Not-At-Risk, Non-Tobacco or Complete Program(s)

Activity-Based Wellness

The following wellness requirements are in place for this company’s employees enrolled on the health plan.

Incentive:

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SLIDE 47

Doi

  • ing

ng Bu Busine ness Bol Boldly mea eans bet s betti ting o

  • n yourself

self.

“I can honestly say that after 12 years, it was one of the best business decisions we’ve ever made.” – Jeff Keller, Asphalt Paving Co.

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SLIDE 48

Cont

  • ntact Inf

Inform

  • rmation
  • n

Lind Lindsay C Chase, , CPA, C , CPC PCU

Vice President Finance Innovative Captive Strategies Lchase@yourcaptive.com 515.223.7038

Jerry Ouime Ouimet

President Cobb Strecker Dunphy & Zimmermann Jouimet@csdz.com 612.349.2414

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SLIDE 49

Do B Busine ness Bo Boldly ldly.

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