View the source here. By: Peter J Strauss
Entrepreneurs are focused visionaries who can be single-minded about pursuing the strategy or product they are developing. Many are unenthusiastic about process or procedure. Those of us who succeed recognize that we must curate a team that is passionate about building an infrastructure that improves our business model and execution. Establishing your own captive insurance company could be the strategy, the missing piece, in your plans to improve your business execution and performance.
At its heart, a captive insurance company formalizes self-insurance for your business. But, it also brings a lot of benefits beyond insurance if properly implemented.
When a captive is established with the care and guidance of a quality captive manager, it brings a focus for risk management and protects your business by:
- Identifying the key risks of your business
- Preparing a detailed analysis of the risks that are optimal to retain in your captive and those that should continue to be covered by the commercial markets
- Providing annual reviews of your risk-management performance to help you develop a risk strategy that better protects your assets and your team while producing a new revenue stream for you
- Producing an organization that keeps your business’ risk management top of mind
Formalizing your self-insurance, or “the captive,” with the help of your captive manager, can bring creativity to policy and coverage design. What’s more, it’s a custom program tailored to your business. We often find that clients significantly improve their execution and risk management as they engage with their captive in an annual review process focused on best practices to cover the risks of the business.
A business owner doesn’t have to be a risk management expert to achieve these outcomes. Leaders just need to engage experts in the captive industry to get advice on formalizing a risk management strategy. The rewards are significant and long-lasting for the business, its employees, and its owners. Insurance moves from a necessary cost of the business to a process that can improve and enhance the business model.
The next time you think about formalizing a process for your business, see it as an opportunity for improvement, particularly with respect to captive insurance.