Companies that are required to provide workers compensation coverage find that such policies are a significant contributor to their overhead expenses. Because of the liabilities that fall to the company even when there is no negligence on the account of the employer, many companies experience high claim volume. With the overall cost of the policy being determined by the loss experiences of the company, this leads to costly premiums.
Switch to a Captive
In recent years, many companies have favored high deductible plans id an effort to save money. Employers have a strong motivation to control losses as the deductible threshold may be as high as $250,000 or $500,000. When switching to a captive to insure your large deductible, the payouts that have been made to meet the deductible have two benefits.
Captive Deduction Benefits
For companies using captives for workers comp, the premium paid in is the reimbursement that is deductible. The captive assumes the large deductible risk rather than the company itself and stabilizes the premium payments accordingly. Deductible costs are also able to be reimbursed when the plan is structured accordingly.
Business owners can use a properly structure captive to lower their financial liabilities and manage their costs for workers’ comp coverage. Deductible reimbursement, when supported by company safety practices, can control rising costs of injury coverage.