By Sandra Fenters
Clients have traditionally looked to captive programs as a business strategy to protect their businesses by insuring property and casualty coverage gaps and/or their enterprise risks not covered in the traditional market.
Importance of Human Capital
One trend we’ve seen gaining momentum for a number of years is business owners looking to better manage the risks and costs on what many view as their ‘most important’ asset: their human capital.
These owners are asking us how they can utilize their existing captive structures to:
- insure their employee benefits,
- improve safety programs,
- enhance risk management techniques, and
- encourage behaviors to avoid certain types of risk.
For those with existing captives, particularly with property and casualty licensed captives, we are able to formally request a business plan change to add coverages, such as medical reimbursement.
This is a hybrid type of program which allows the captive to issue property casualty policies, enterprise risk policies and some health care-related policies. It is a true blend.
What Does This Mean for Existing Captives?
There are ‘moving parts’ with all captives, but there are additional things to think about when writing coverages that involve your Company’s Human Capital, including but not limited to educating yourself on requirements of The Department of Labor and ERISA. If you add such coverages, you may notice changes within the captive, including the following:
- It changes balance sheets.
- There are different requirements around reporting to regulators.
- It alters required loss reserves.
Therefore, some caution is warranted.
But there are certainly advantages for some Companies to add coverages, such as medical reimbursement to their underwriting program, and we expect to continue to see this trend.
If you have questions about how such a plan could benefit you, please contact us.
Capterra Risk Solutions, LLC
842 5th Avenue
Coraopolis, PA 15108