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Reduce the Costs of High-Deductible Policies

For those firms that use a large deductible (or buy down/buy back) plan to help reduce their premium for their workers’ compensation, products liability, professional liability, or other line of coverage to protect their business, captive options are ideal for many organizations. Prime candidates are those that take a long-term view toward risk management, possess a stable cash flow, have a strong belief in loss prevention and are willing to share the risk.

You get all the benefits of a captive without the hassle. There is no commitment of funds for capitalization, reduced administrative costs as compared to owned captives, flexibility, underwriting profit and investment income. They can cover programs that are loss sensitive and have less restrictive exit provisions, among other benefits.

A Rent-A-Captive can be structured to keep a separate underwriting account for each insured participant. In some domiciles, these accounts are legally separated or protected, and the terms cell captive or Protected Cell Company (PCC) are used, indicating that each insured’s assets are kept in its own walled-off cell. The assets in one participant’s account may not be used to pay liabilities in another unless the respective participants have entered into an agreement to do so.

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