Orlando, Florida – Several captive owners said risk managers can use the captive to negotiate potential commercial insurance rate increases, even if they do not use the captive to cover the risk.
He was speaking during a session Thursday at the World Captive Forum in Orlando, which is sponsored Business Insurance.
Massachusetts Life Insurance Co. faced a difficult property renovation two years ago, said John O’Neill, chief insurance attorney for the Springfield, Massachusetts-based company.
“We didn’t have a lot of claims … but some of the top-tier property carriers really wanted a lot of premiums,” he said.
The company decided to run the top layers of the property program through its captive, but two days before renewal the insurers came back with an offer of significantly lower premiums for the coverage, Mr. O’Neill said.
“We had already walked away from it, at least mentally and emotionally. It was almost like going to the car dealership thinking ‘I’ll never own that car’ and then three days later the dealership calls you back saying, ‘Do you still want it because we can come to you for a little ,’ ‘” He said.
Jonathan Poling, director of risk management and internal audit at Sun Chemical Corp., recalled a similar experience when the Parsippany, New Jersey-based company faced a significant increase in its medical stop loss program.
The program had great loss experience but the insurer wanted to increase premiums by 45% at renewal, so Sun used a reinsurance broker to check coverage for exposures through the company’s captive.
“When the incumbent found out we were looking to move it to a captive, we got a 7% or 8% increase and that was a big win,” he said.
Michael Serricchio, New York-based managing director of Marsh Captive Solutions, who moderated the session, said the medical stop loss business at Marsh Captive has grown 84% over the past three years.