Performance Insurance Co. proudly operates as an insurance captive. Captive insurance companies are fully owned and controlled by those it insures, allowing for greater stability, financial freedom and customization.
Captive Insurance is term full of mystery or that sometimes breeds suspicion among businesses today. With all the scrutiny from the IRS and blockbuster movies about laundering money to offshore accounts, it's no wonder many are distrustful of the captive insurance world.
So what are captives? Simply put, they are a stand alone insurance company often owned by the shareholders of the business it insures. It is not an entity of the business, but a separate potential profit center for the business. And yes, it is completely legal!
The history of the captive and the history of insurance as a whole can be dated back to Venetian shipowners, recognized as pioneers of insurance. At this time, if a shipowner lost a ship or cargo to pirates or a shipwreck they lost everything. In order to manage that risk better, they created groups to split the risk. Shipowners would gather into groups and place money in a giant pot to insure their ship and cargo, so that if the ship were to be shipwrecked or damaged, the group would help pay to cover their expenses and losses. If the ship made it safely to shore, they would be issued back their money with additional interest. As these groups came into play, the members of the group became exclusive. They would only accept members who traveled on certain routes or during certain seasons. They wanted to know the crew and the cargo. They even wanted to know where on the ship the cargo was stored or what type of knots they used to secure it. These groups evolved through the years until the first official insurance company was founded in 1688 in London, England: Lloyds of London.
As we can see, the true origin of insurance was a group captive. These Venetian ship builders pulled their assets together to create risk shifting and risk distribution. So, even though the captive is considered an alternative risk financing mechanism, it has its origins as far back as insurance itself.
Today we see the captive industry exploding in the marketplace. With over 25,000 captives in existence worldwide, companies in the Fortune 500 all the way down to small, local companies are leaving the traditional marketplace to enter the captive space. Because the captive is a form of self insurance, it becomes a risk-reward game. Companies have more dollars at risk if they perform poorly, but can have 60 percent of their premium returned to their bottom line if they manage risk effectively. The reward is dependent upon the performance of the individual. Captives help the company get in the driver's seat and behind the wheel.
For a deeper dive into the realm of Captive Insurance, contact your local InCite Performance Group agent.
For every risk, there is a reward