Looking For A Better Way to Manage Your Total Cost of Risk?
A Quick Construction Captive Case Study
Heavy civil contractors face unique risks that many insurance companies are hesitant to cover, often due to a lack of expertise or concerns over catastrophic claims. This limited competition can lead to higher insurance costs.
One of our long-term clients experienced annual increases in insurance costs despite maintaining a consistently good claims history. They continuously invested in safety and proactively managed their claims but lacked control and transparency in their insurance pricing. This is a common issue for many construction companies.
The Solution: A Construction-Specific Group Captive
McConkey identified a group captive dedicated to the construction industry as a solution. Unlike heterogeneous captives, a dedicated construction captive offers tailored coverage, claims, and risk control services specifically for the construction industry, providing better value and improved claims control.
Success Story: A Case Study
McConkey recommended the leading construction group captive, conducted a feasibility study, and assisted our client in enhancing their safety program to maximize the benefits of the group captive. Due to the company’s excellent loss history, the initial captive pricing was lower than the best standard market rates. The upfront savings and projected six-figure dividend made the decision easy.
Significant Savings and Stability
After a good first year, resulting in a $300,000+ dividend, there was a significant workers’ compensation claim in the second year. Despite this large claim, subsequent renewals remained stable, and workers’ compensation rates decreased significantly. Overall, the client saw a more than one-third reduction in general and auto liability rates and over a 50% reduction in workers’ compensation rates. Additionally, they received nearly $500,000 in dividends and built up over $500,000 in equity, which will be declared as a future dividend.
The Key to Exceptional Results
The primary reasons for these exceptional results are:
1. Premiums are based on your 5-year loss experience and not by state rates or underwriting appetite.
2. All profits are returned to the members, and dividends are almost entirely based on your own claim experience.
3. Captives foster an environment that improves safety procedures and allows for proactive management of claims.
Join the Group Captive Success
While not all captive members have such an exceptional experience, this success demonstrates the potential benefits of diligent upfront pairing with the right captive. For more information on how your company could use a captive to manage your total cost of risk, contact Tim Ziegler.
