Once just a dot on the insurance market landscape, captive insurers have become a mainstream risk management tool over the past 50 years.
While exact figures are not available, experts say roughly 100 to 200 captives were operating in 1967, the year surveys. The 7,000 captives number understates how many organizations now fund at least a portion of their risks through captive insurers.
“Captives used to be called the alternative risk market. For example, about 1,600 educational institutions obtain a wide range of casualty coverages through one Vermont-based captive, United Educators Insurance, a Reciprocal Risk Retention Group, whose premium volume soon is expected to hit the 0 million mark, up from million nearly two decades ago. Employers saw if commercial insurers could not provide coverage, they would have to take new alternative risk transfer approaches, such as forming captives,” said Michael Douglas, director of business development-captive insurance at Aon Global Risk Consulting in Philadelphia. Legislators approved a measure expanding a 1981 law that authorized a special type of captive, known as a risk retention group, to write all commercial casualty coverages except workers compensation for member owners nationwide after meeting the licensing requirements of just one state.
“Today, what would have taken days and days to measure the diversification effect of noncorrelated risks in captives can now be done in a fraction of that time,” said Jim Swanke, director of risk consulting at Willis Towers Watson P. Real-life case studies provide the good, the bad, and the ugly of E&O claims made against agents.They provide an excellent way to learn what agents should and should not be doing to reduce their E&O exposure.With the names changed to protect the innocent, or guility in some cases, these case studies can be shared with agency staff as learning tools and to keep E&O claims prevention at the forefront of their minds.Barry Businessman entered ABC Insurance looking to change both his agent and carrier.Barry’s business had recently suffered a small fire loss.That was when Barry learned his policy contained a 100% coinsurance clause and the business was underinsu...John was an experienced agent at a medium sized agency.John placed CGL, Commercial Auto and Work Comp for his longtime client Hannah. In addition to her business interests, Hannah owned a very large hous... The client owned a large home in an area that was prone to flooding. Midtown Emergency Medical Transport has been placing its CGL coverage through Teresa’s agency for ten years.Olivia, a CSR for Joust Insurance Agency, has been placing coverage for P&G Construction for a number of years with Heritage Insurance. Teresa and Frank, MEMT’s owner, have a friendship predating their business relationship.Joust has a membership with and receives regular updates on the rating of its carriers. Penny was contacted by another agent who was acting as an insurance consultant for a jewelry store and was seeking quotes through several agencies. Frank has gone to Teresa for all personal and comm...