More and more, companies are turning to alternative risk transfer resources to balance out their risk management plans. In some cases, like many fidelity bonds, it’s because the alternative is a more efficient way to manage the risks while ensuring financial resources are available in the event they are needed. In other cases, it may be because insurance doesn’t provide protection in the right form, which is also true for many types of professional bonds as well as some captive insurance programs. There are also alternatives meant to fill in gaps in other kinds of coverage. If you’re still using traditional insurance exclusively, it helps to know how options like captive insurers change up your approach to risk management.
There are specific captive risks that come from establishing a new company to handle your insurance, but they are often mitigated by partnering with other companies to co-found a captive insurer who can work with all of you. The key is to partner with companies who share many of the same risks you do, so you can create plans that work while sharing the risks associated with the new venture. That allows you to build your captive insurance around your bonds and traditional policies, crafting the coverage provisions that fit perfectly with the products you already use.