A Captive Insurance Company (CIC) is a closely held, licensed company established with the objective to provide risk management and risk financing of its retained self insured coverages.
CICs can also reduce the direct cost of a company’s insurance coverage by eliminating the various expenses associated with commercial policies, which ultimately helps preserve the business’ working capital.
A Captive risk management strategy is also a form of private risk transfer and customized insurance coverage for a company. The Captive can economically assume a portion of those risks and participates with other insurers for any losses from the coverage of those defined risks. The insured medical business pays premiums to a fronting insurance carrier for full insurance coverage; this insurance company then cedes portions (50% or less) of the risk to the captive reinsurance company.
In the case of a medical practice the Captive will assess the multitude of self insured or “hidden” risks to which the practice is currently exposed. The medical practice can then obtain insurance coverage for these self insured or hidden risks. These risks include but are not limited to:
- Loss of Hospital Privileges
- Loss of Medical License
- Loss of Patient Referrals
- High deductibles for professional liability/medical malpractice coverage
- Cyber Risk
CICs also reduce the direct cost of insurance coverage for a medical practice by eliminating the various expenses associated with commercial policies, which ultimately helps preserve operating cash in the practice.
Captive Alternative’s Creative Risk Solutions is a comprehensive and customized service package specifically designed for medical professionals and business owners. The Creative Risk Solutions approach will thoroughly assess the risks to you and your practice, implement the most effective CIC insurance stratety, and ensure on-going CIC compliance and risk management. Our team of experienced specialists will assist you step by step to fully understand the benefits of your new Captive Insurance Company.
The Creative Risk Solutions Advantage
Some of the most useful benefits of Captive Insurance for medical professionals are succession planning and exit strategies for your practice. Many doctors find out too late that they have poured their sweat and blood into a highly successful practice that cannot be monetized. While other industries can often sell their assets and businesses at the time of retirement, doctors find it more difficult to turn their years of hard work into a large and prosperous nest egg. A Captive Insurance Company can be a solution to the medical practice’s strategic business succession planning.
We have also found that many practices find it difficult to attract young, talented doctors. The Captive Insurance Company structure briefly described above can also be used to create a powerful compensation tool for you and your practice to attract and to retain medical talent. Contact us today to find out how we can better leverage your hard work to your benefit.
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