Captives FAQs

April 22, 2019 · Commercial Lines

Blog Captives FAQs

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Please note: coverage cannot be bound or altered online. A service representative will need to contact you to finalize your request.

Why should my company consider a captive option?

A captive option could lower your costs and make your premiums more predictable. By implementing a group captive you create your very own captive reinsurance company and avoid the hard and soft cycles that affect premium fluctuations. You can pool your resources to lower costs and retain your investment income.

Does Joining a Group Captive Increase My Company's Financial Risk?

No, Leavitt Group of Boise and (Captive Resources) client captives are properly structured to avoid this. We use a licensed and admitted insurance company rated A- or higher by A.M. Best to act as the policy-issuing company with an equally strong reinsurance company to insure catastrophic losses. This makes the risk manageable. The captive only assumes risk in the smaller and more predictable loss layer.

Will There be Dividends? Are Loss Experience and Dividends Related?

When declared by the Board of Directors, members who have profits in their respective loss funds will have these profits returned to them along with the investment income earned for that policy period. Generally, returns begin three years after the end of a policy period; this is a decision of the Board.

The board of directors declares that members with profits in their loss funds can have profits returned to them. This also includes the investment income earned for that policy period. Returns usually begin three years after a policy period ends.

Can a Profitability Decrease Premiums Rather Than Dividends?

The captive's independent actuary will determine funding for losses. Captive pay-in premiums can decrease over time if the amount being funded is more than losses. But premiums can increase if the opposite is true. Members may be able to choose to put cash towards the premium when the captive board of directors declares a dividend.

How Long Must I Remain in The Captive to Participate in Profitability?

Your commitment to the captive will be for one policy period. We do not have any 'handcuff' clauses. But we do ask that you make a moral commitment of three years. This will give you enough time to learn and to understand how the captive works. If the board decides to return a dividend, generally it will be three years after the policy period ends.

Are Additional Assessments Available if the Underwriting Results Are Not As Planned

Loss exposure is quantified using your company's loss experience. The assessment is based on defined parameters, including when and how they may occur. You will know up front what your maximum amount is, even in the assessment is limited.

Who Does Leavitt Group of Boise Serve With Captive Insurance Services?

Leavitt Group of Boise provides captive insurance through Captive Resources as well as captive consulting to a broad array of industries, including:

  • Construction
  • Transportation
  • Manufacturing and distribution
  • Retail
  • Temporary employment agencies
  • Hospitality
  • Food and beverage production
  • Health care services
  • Oil and gas well operations/services
  • Agri-business

The captives advised by Leavitt Group of Boise and Captive Resources reach businesses across a broad range of industries, in all regions of the country.

Above all else, what draws businesses Leavitt Group of Boise and (Captive Resources) model and is our top rated captive insurance services is greater control of their insurance destiny, realization of significant cost reductions and long-term savings.

Other qualities that participants in Captive Resources-administered captives share include:

  • Long-term financial strength and stability;
  • Management teams committed to safety, with solid safety programs in place;
  • Loss histories that are average or better than average for their respective industries; and,
  • Minimum casualty* premiums of $150,000. However, group captive members generally have annual premiums of at least $250,000, but can reach or exceed $15,000,000.

*Workers’ Compensation, General Liability, Automobile Liability and Physical Damage.

Is a Homogeneous or Heterogeneous Captive Best For Me?

At Leavitt Group of Boise all captives are accessed through Captive Resources’ and works with both homogeneous and heterogeneous group captives, believing there are advantages to both; ultimately the prospective member company chooses the type of captive with which it is most comfortable. Over the years, when forming new captives, Leavitt Group of Boise with Captive Resources has responded to meet market demand while maintaining its original vision of providing stability and control for the captive member-owners. This is evidenced by the diversity of our current captives.

Some of the industries for which homogeneous group captives have been formed include:

  • Agri-Business
  • Building Contractors
  • Distributors
  • Healthcare / Long-term Care
  • Heavy Construction Contractors/Service Companies
  • Redi-Mix & Heavy Truck Operations
  • Roofing Contractors
  • Oil/Gas Exploration and Services
  • Staffing Agencies
    • Clerical
    • Light Industrial
    • Healthcare
    • IT and Professional
    • Industrial
    • Agriculture
    • Drivers
    • Construction
    • Energy
  • Transportation
    • Trucking – TL & LTL
    • Student Transportation
    • EMS / Patient Transportation
    • Motor Coach Operations
    • Shuttle & Limousine Operations

Our heterogeneous group captives typically include:

  • Dealerships (Auto, Heavy Construction, etc.)
  • Service
    • Distribution
    • Wholesale
    • Retail
  • Manufacturing
  • Construction

A new captive member wants to feel comfortable with its choice of captive, both as an owner of the company and as an insured. Although Leavitt Group of Boise offers prospective captive members both heterogeneous and homogeneous captive options, both operate essentially the same way, i.e., with a similar unbundled service structure, same risk-funding formula, etc. When a prospective member company must decide which type of captive is the best fit for its business, Leavitt Group of Boise and Captive Resources will advise the potential advantages and disadvantages of each, and endeavor to provide the information the company needs to make a sound decision. Perhaps the prospective member feels that a homogeneous captive with loss prevention programs tailored to its specific industry will be more beneficial than a heterogeneous captive offering a greater spread of risk across various industries. There are a number of issues to consider but ultimately, it is the prospective member’s decision.