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What is Captive Insurance? (2019) - YouTube
Channel: Colin Cadman
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alright let's talk about captives this
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video we're gonna teach you what a
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captive is how it works and whether it's
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the right fit for you so who needs a
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captive companies that are typically
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over 50 lives they have a pretty healthy
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population or it's a population that
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might be a little bit risky but by
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joining a captive they might get into a
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better risk pool so what are the types
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of captives that are out there the four
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main captive styles are single-parent
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captives that's for a huge company like
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Amazon to set up their own insurance
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company to pay their own claims number
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two you have a renta captive and that's
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basically when an insurance company
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creates their own captive for a specific
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niche like United Healthcare has their
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engineering captive that's so that they
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can contain their own costs for a
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specific level of risk and offer a
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little bit cheaper premiums than they
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would be able to offer the open market
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any industry number three you have group
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captives and that's when multiple
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employers usually sharing something in
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common like their risk level or their
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industry will all come together and say
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why don't we pair claims through a pool
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of money that we each contribute to it's
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a little less expensive for us
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individually if there was something that
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was catastrophic we will go to the
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reinsurer and finally number four that's
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the risk retention group so that's when
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you have a venture capital firm that
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specifically creates a captive and they
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say hey we will sell our insurance like
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an insurance company to any company that
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fits this profile because we know that
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we can manage our risk a little bit
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better than going through a major
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insurance carrier in a traditional
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insurance model the employer purchases
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insurance from the carrier for example
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that would be United Healthcare it could
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be Aetna Blue Shield etc and the way
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that they do that is they go through a
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broker who goes out to the marketplace
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and fine
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and the appropriate insurance carriers
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for them brings it back and helps them
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make that decision what some employers
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start to see is if they have a very
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young and healthy population then they
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don't really use their insurance that
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much maybe they're looking at how much
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they actually pay in premium versus what
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the actual utilization looks like so in
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that situation an employer can look at a
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captive and say maybe it makes more
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sense if we're paying claims ourselves
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because we know that we would pay more
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money to an insurance company to pick up
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those claims then we would if we just
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paid out of pocket now if you're not a
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company the size of target maybe you're
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a smaller employer in that 50 to maybe
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500 life range what you would do is join
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a captive that's already set up a
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collection of employers that are all
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contributing to a pool and if a claim
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comes up for any of the employees that
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work for any of those employers then
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that claim gets paid out of the pool and
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what you should do is you should work
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with a broker who understands the market
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and what captives would entertain
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bringing on your group if you are a
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gigantic company then you should be
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working with a broker who's got lots of
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knowledge and experience on self-funding
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and how to set up your own captive for
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more information check out the other
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videos that we'll post on more advanced
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detail on captives how the reinsurance
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works how you get specific reinsurance
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and aggregate reinsurance and what it
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actually looks like when you check your
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spreadsheet and break down the pricing
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shoot your information down to the link
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I'll post below for more content like
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this you can check out our playlists or
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videos that we upload every Tuesday and
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Friday make sure you subscribe and click
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the bell so that you can get
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notifications turned on thanks for
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watching and we'll see you next time
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[Music]
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okay good for the blooper reel
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