The development of captive insurance companies has been a way for insured businesses to save on their insurance costs. It is typically a less expensive alternative to securing policies from conventional insurance companies. In order to assist these insurance companies so that they can continue to offer the best value for those who are insured by them, companies like Captive Insurance Services offer consultation services to many captive insurance companies.
One way insurance consultants help is by evaluating the formulas that are used to calculate premiums. An unbiased method that bases the premiums on the loss history of a company rather than aggregated averages throughout the industry will typically result in significant savings, especially for businesses with low loss history.
These consulting companies can also help their clients by providing risk management services. Evaluations can be done by visiting insured businesses and reviewing their facility layout and business practices. From there, recommendations can be made that will lower the risk of things like fire or theft. For example, the amount of flammable materials on hand can be evaluated against what is actually necessary. Lowering the risk may be as simple as reducing the inventory level of those types of items. When this is not feasible, proper storage methods may enter the picture.
Another thing that puts businesses at risk for losing money is the injury rate of its employees. While it is hard to put a price tag on human suffering, injuries also translate into lost dollars. First, there is the medical expense for the injured person. Something like a serious back injury that becomes a life changing event for a worker can end up costing hundreds of thousands of dollars. By making recommendations that will minimize the risk of injury, consultants can save their clients some serious dollars.
In addition to cutting down on worker’s compensation costs, consultants who can conduct safety evaluations can save the insured businesses money by helping them to be in compliance with the regulations. An inspection by an enforcement agency like OSHA can result in significant fines when noncompliance issues are detected.
There are a number of other ways consulting companies can save money for those who go the captive insurance route. Effective claims management can keep the losses to a minimum and cut down on fraudulent claims. Buying power leverage can be used to drive down rates. The list can go on and on. If you are in charge of keeping insurance costs down within your own company, you might want to check into what a captive insurance consultant can do.