Doctors and Captives

Many medical practices are fighting an increasingly futile battle against declining reimbursements, increased regulation and concerns about the declining value of a medical practice and exit strategies. As a result, a growing number of doctors are exploring the concept of private insurance.

What is Private Insurance?

Private Insurance is a fully regulated insurance company that typically insures the risks of the medical business owner who sponsors the company.

Participating in a private insurance arrangement allows you obtain coverage for potentially catastrophic risks, and yet keep some of the premiums you would pay someone else, and then create surplus underwriting profits for a variety of purposes. Private Insurance is fully subject to standard insurance regulations and reporting requirement.

In some cases Private Insurance is used to provide excess or additional coverage in areas already covered by primary lines of insurance, like malpractice. In other cases, Private Insurance can be used to provide supplemental coverage on risks not covered in traditional liability policies.

A typical medical practice needs five or more basic types of liability insurance for things like professional liability, employee lawsuits, cyber liability, general liability, and even “key-man” coverage. CapAlt offers more than 30 different insurance policies tailored for doctors who want to be privately insured. 

What happens to my premium payments?

Premiums are determined by professional underwriters and an actuary who prepares a detailed actuarial analysis based on your coverage needs, budget and risk exposure. You pay your premiums to a licensed insurance company, who issues your policies. Premiums are generally deductible as an expense to your business, as opposed to “self-insuring,” which is usually not tax deductible and which can’t compete with the coverage you get when buying insurance.

In turn, the insurance company reinsures the premium to a Protected Cell reinsurer – less fees and claim reserves. The Private Insurance Strategy can then invest net premiums for the profit of the insurance company. 

Can I reinsure as little or as much as I want to?

You can cover a wide variety of legitimate risks. An actuary will develop premiums and apply a very specific actuarial formulas that dictate minimum cash reserves, what the internal costs of reinsurance should be, and what risks you can legitimately insure against. The list is very long and comprehensive. You can also move some of the costs of commercial risk into Private Insurance by taking high deductibles on workers comp, health insurance and medical malpractice.

Dermatologist at Work
“Our captive gives us an additional level of comfort in making prompt decisions around employment…”

Maryland Surgeon
Physician’s captive insures him against the exposure associated with Medicare and audits.

Florida Surgeon
With Captive Alternatives, one physician has found protection from professional liability risks.