the greatest benefits of a member-owned group captive as compared to traditional insurance is that it provides member companies with significantly greater control over their unique risk management concerns. The“ unbundled” structure in group captives allows for crane owner members to help design risk mitigation plans as a required tool to reduce losses.

First, premiums to the captive are based( only) on the individual member company loss experience, which the member company can control and reduce.

Secondly, the cost of protection is reduced significantly when traditional insurers( loading) costs are excluded from the premium calculation.

And lastly, group captive member companies have proven to be safer than the average company according to data from the Bureau of Labor Statistics, III and Captive Resources-based market research reports.

Handling and Reporting:

In the group captive, member companies have greater involvement in claims management, influencing claims-management strategy and ultimately have a direct impact on claimsmanagement costs.

In a traditional insurance arrangement, crane companies must rely on the overly reactive traditional insurance claims model. Group captives unbundle each facet of the claims management process to derive a more cost-effective claims outcome with litigation containment functions built into the hybrid captive claims model.

Group captive members are often involved in working with their captive administrator and claims third-party administrator( TPA), directly for selecting proper local counsel and assistance with overseeing the process of investigation and claims resolution, in accordance with policy provisions.

Risk Management:

Premiums to the member-owned group captive are established based exclusively on the member companies’ loss experience. Comparatively, in a traditional insurance arrangement, crane companies with excellent safety records and loss ratios far below the average in today’ s crane insurance marketplace, are likely paying nearly the same premium levels as crane companies with much higher loss histories.

In a member-owned group captive, if a crane owner’ s experience is better than the average experience in the crane market, they will realize lower-than-average premium costs. This incentivizes member companies to undertake more loss control efforts.

Reinsurance: Unlike traditional insurance plans, a captive can go directly to the global reinsurance market and purchase coverage at wholesale rates because it is essentially an insurance company. Further, the price for reinsurance coverage is driven by the captive’ s own exposures and loss record, not the experience of the industry.

The captive does not have to work through a commercial insurer for this access, and this saves on the expenses associated with dealing with commercial insurers, such as commission costs, administrative costs and profit markup. Member companies can retain much more control over the selection of and arrangements with reinsurance partners.

for Profits: Member companies are rewarded for effective risk management in memberowned group captives because unused loss funds are paid back to the captive company in the form of a dividend( less provision for risk sharing).

Also, investment income earned on loss funds as well as capital and cash collateral accumulate for the members

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