Category Archives: Case Studies

I Am in Health Care: Every Day Is a Gamble

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Dr. Barbara McAneny, CEO and President of New Mexico Oncology Hematology Consultants, LTD, has long been an advocate for captives and their ability to offload risk while reducing commercial insurance companies’ premiums that vanish from her practice’s bottom line.

In the winter of 2024, her practice along with other medical practices faced a major challenge.  Due to a cyber breach involving one of the medical industry’s largest claims processors, Change Healthcare, her practice could not process their patient claims immediately.

Dr. McAneny had upcoming payroll looming for almost 300 employees as well as other payables, such as buying chemo drugs for their patients, with no incoming cash from Change Health. The inability to process claims and secure cash flow would impact her practice for 16 weeks.

Fortunately, Dr. McAneny and New Mexico Oncology Hematology Consultants, LTD operated a private captive insurance company, which had built up cash reserves to mitigate for such a risk. Dr. McAneny leveraged the captive by accessing its surplus in order to help mitigate further loss due to the cyber breach.

In addition, the medical practice has coverage through the captive insurer for additional expenses.

Not all medical practices had the ability to mitigate risk for such a major event; some practices needed to be sold as they were not able to insure the risk of the cyberattack and loss of receivables for several  months.

Dr McAneny also appreciates captives for their ability to mitigate the risk of punitive damages which traditional insurance does not cover. Since the captive was created in 2011, it has protected the practice from many risky events.

Dr McAneny started working with Capterra in 2021 after gaining an understanding of the true role and value of a Captive Manager.  Speaking of service providers, she continued, “There are ones that say why you can’t do it, the others find ways to provide solutions in a safe, compliant way.  I need someone to think with me and be creative in mitigating uninsured risks of my practice.”

Construction Case Study: Franjo Construction

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Avoiding Taking It on the Chin

Summary

Franjo Construction, a Pennsylvania-based general commercial contractor, faces a wide range of risks in its construction business. Claims erode profitability.

Challenge:

A big issue for construction firms is workmanship claims.  Joe Leonello, Jr, President of Franjo Construction, points that ‘we as an industry make a lot of mistakes.’ This can be costly.

However, there can be many limitations to coverage provided by commercial carriers. Because of these limitations, construction firms like Franjo must take on significant risk. Mr. Leonello points out that “when there are claims, our profit for the job fades.”

Capterra Solution:

Capterra put together a single-parent captive that provided Franjo with the comfort to mitigate the risks as well as allow the firm to know its claim history to better price jobs and reduce future losses.

Results/Benefits:

“We built a hotel where select panels flew off the building a number of years after its completion,” says Joe Leonello. “We assessed the problem and fixed the issue but had to write off a substantial sum five years after the construction ended. This presented a challenge to our profits.”

With its captive program, the claim was fully paid by the captive – preserving Franjo’s annual profits.

“Franjo would have taken it on the chin had it not been for the captive insurance program.”

Captive Insurance Brings Peace of Mind to Houston Business

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Client Concern/Issue:

The principals of a Houston-area furniture retailer and interior design firm sought better control over potential business risks that its commercial policies were not covering.

Capterra Solution:

The firm launched a captive insurance program in 2013 to mitigate these risks.

Over 8 years the program has been called upon to cover a number of such claims.  The policy not only covered damage and business interruption losses from Hurricane Harvey, but it also paid claims on lost business due to a key employee exiting the company.

Capterra Risk’s Exceptional Support

The principals value Capterra’s deep expertise in risk mitigation and understanding the retailer’s requirements of their captive program. “Capterra allows us to focus our attention on our business with the ‘peace of mind’ that Capterra has our captive program fully covered.  They rigorously track the program’s details, keep us in full compliance, and update us on regulatory changes that affect our captive insurance company.”

Results/Benefits:

COVID-19: Illustrating the value of captive insurance

The captive program really showed its worth in spring 2020 when COVOD-19 shut down the United States economy. While US government programs did provide some payroll support, the business still suffered closures and significant delays, leading to lost profits. The captive’s Contingent Business Interruption policy paid a significant claim to cover these losses. This claim would certainly have been rejected under a commercial policy.