Captive Insurance Shines in Pandemic

Despite Presenting Challenges, Coronavirus May Well Be Captive Insurance’s Finest Hour

By Sandra Fenters

Times like these are when captive insurance shows its’ real value in protecting America’s small and mid-sized businesses from disasters.

What we are seeing is:  operating businesses with captive programs that insure relevant risks have both more complete and flexible insurance as well as access to more capital than most of their competitors. This is a major benefit.

The media is beginning to notice

There have been two columns written in the last few days that highlight what captive insurance brings to cover unlikely events.

Columnist Paul Sullivan of the New York Times wrote an article titled, “Once Scrutinized, An Insurance Product Becomes a Crisis Lifeline.”   In it, Sullivan points out that:

“[Small Captive Insurance companies are] proving to be beneficial as the coronavirus pandemic shuts down local economies.”

Some of the more common coverage options, like the risk that business will be interrupted or a supply chain disrupted, are claims that business owners need to make. In this economic crisis, captives may be showing their worth.”

And yet another view:

Reporter Maria Ward-Brennan of the Captive Insurance Times interviewed Ben Whitehouse, an attorney nationally recognized in the captive insurance industry.  Whitehouse states:

“The current COVID-19 pandemic is creating captive insurance’s chance to shine” and the “time is now for companies to start looking at captive insurance.”

“It is this kind of environment where a captive insurance company can be given a chance to shine. A captive not only gives businesses the chance to recapture unused premium, but it also allows for more flexible policy forms without the fine print exclusions that lead to coverage gaps.”

The full article is here.

While the full effects of the coronavirus on the economy are yet to be tallied up, the businesses with captive insurance policies are in a stronger position to mitigate their risks and thrive in the future.