May 2013

Becoming captive

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Many companies can benefit from captive insurance programs

by Nate Heying
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If you are like most roofing contractors, insurance renewal time is one of your least favorite times of the year. Despite your best efforts to provide loss-control services to reduce claims, the cost of insurance continues to rise. You rely on your agent to get you the best rates, and yet you continue to hear the reason for rising rates is not the result of your claims history but a consequence of the roofing industry's high-risk nature.

Unfortunately, many roofing contractors do not have a fighting chance in the traditional insurance market regardless of having successful businesses. The property and casualty insurance industry's financial results for the first nine months of 2012 show better loss ratios combined with higher investment income for insurance carriers compared with 2011.

A year ago, many industry experts predicted a looming hard market (significant rising insurance rates), and, though this now looks unlikely, it still is anticipated insurance rates, specifically for workers' compensation, will rise. With a fluctuating market and increasing amount of claims being denied by carriers, it is easy to see insurance carriers hold the control.

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