Lawyers today face steep competition, increased regulation and an ever-changing technological landscape. The smartest firms understand the need to evolve to remain profitable. As a result, a growing number of lawyers are exploring the opportunity of owning their own Private Insurance Company.
Enterprise Risk Management
What would you do if you suddenly lost a key client or top associate? If a data breach exposed protected client information? Or if your firm’s hard-earned reputation was damaged by social media posts from a disgruntled employee or client?
The goal of Enterprise Risk Management is the reduction of uncertainty. Thus, ERM is responsible for the long-term sustainability of the firm, protecting a carefully developed brand and reputation from a variety of threats.
Making sure your operational risks are adequately identified and contained is critical. A Private Insurance Company provides a logical solution to jump-start the ERM process, and gain flexibility and control the cost of insurance. A properly structured Private Insurance Company allows access to customized coverages that enable you to reinsure risks at costs that are often lower than with retail insurers, ensuring your business is fully and affordably covered and filling the gaps left by most commercial insurance policies.
What is a Private Insurance Company?
A Private Insurance Company is an insurance company that insures the risk of its owners. This is a real insurance company that must be formed, licensed and regulated for the specific purpose of providing insurance coverage to your business. Rather than paying insurance premiums to a commercial carrier (a substantial sunk expense regardless of claims activity), captive owners pay premiums to their own insurance company. After a Private Insurance Company pays claims and operating expenses, the remaining funds continue to grow within the captive. These monies can be paid out as distributions or used to defray the cost of business growth.