Every firm deals with risk. Yet risk is particularly significant for companies in the construction industry.
Consider some of the obvious risks and dangers at a construction site:
- Active use of equipment and tools
- Strenuous work by team members such as climbing and lifting
- Moving large amounts of raw materials and heavy building supplies
- Weather events or lack of supplies causing business interruption
- Theft of supplies and equipment
- Workmanship defects or design errors
- Pollution and environmental liability
In addition, it is very common for construction firms to engage external teams such as suppliers, contractors or sub-contractors who bring with them their own set of processes and risks.
It is not hard to spot the many challenges in managing risk at a construction business.
Managing this risk
Savvy construction firms spot these risks and take steps to limit their exposure.
Yet, commercial insurance is often not the best fit for construction firms to manage these risks as the insurance can be expensive and still leave major gaps in coverage. To fill the gaps, construction firms often need to pay significant premiums.
Construction companies increasingly look at captive insurance as a way to manage their unique risks and even reduce costs.
Case study: Captive Insurance as a Risk Management Tool
We share an example of a construction firm which finds significant risk in missing deadlines.
Click here to view the firm’s risks and how a captive would benefit the firm.
What is captive insurance?
A captive insurance company is a form of self-insurance organized for the primary purpose of providing insurance protection to its parent company (operating company), owners, and/or related entities.
For decades, large corporations have established captive insurance arrangements to create a tailored insurance portfolio to fit specific needs. Today, closely held businesses including construction firms are also taking advantage of the numerous benefits afforded by captive insurance arrangements.
What are the benefits for construction firms?
There are a number of benefits of creating a captive insurance company:
- Stabilized insurance budgets – have consistent expenses around insurance
- Improved claims handling– the firm controls the claims review process
- Creation of profit center– firms keep underwriting profits, providing an incentive for loss control measures
Many construction firms have sought out more information on captives given these benefits.
What should we do to properly manage our firm’s risk?
Managing risk should be a full program utilizing traditional insurance, captive insurance, and means of risk mitigation such as safety procedures. Risk management should be reviewed at least annually as the Company grows.
The benefits of forming a captive company can be fully realized when owners partner with experts such as Capterra Risk Solutions. As your Captive Manager, Capterra Risk will help you look at the big picture of how you manage your risk so that you are aware of potential exposures and make educated decisions on your overall insurance program.
Contact Capterra Risk Solutions today to learn more.
Contact Information:
Capterra Risk Solutions, LLC
842 5th Avenue
Coraopolis, PA 15108
412-802-2600