Artisans::Advantages

Advantages

The standard market incurs many expenses not related to individual clients, it is inefficient, and the buyers have to pay for that inefficiency. Captive companies have a lower operating cost (“expense ratio”).

The standard market retains the benefit of earned investment income on their policyholders' premium. In a captive, the investment income on the premium inures to the benefit of the captive owners.

The standard market is subject to insurance cycles, alternating between artificially low and excessive premiums, when the basic purpose of the industry is to stabilize costs. Captive owners fund their own predictable losses while reinsuring catastrophic exposures. Premiums can be stabilized through loss control.

The standard market selects only those classes of risk that conform to its “standards”. Captive owners decide which risks are acceptable and evaluate prospective members.

The standard market avoids providing individual services on a fee basis. Captive owners decide which services will be purchased promoting cost effectiveness.

Captive owners negotiate fees in advance with the policy issuing insurance company for selected services and guide their own tax and investment programs.

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