History, Mission & Overview
Transportation Captive has been created to meet the needs of truckers to obtain adequate insurance coverage at affordable rates. The founder's of this Captive perceived that the commercial insurance industry was not responsive to this basic commercial necessity.
The mission of this Captive is to provide the highest quality insurance protection and services for its shareholders. By bonding together to create true sharing of risk, the shareholders can control their insurance costs and avoid the volatility of the general insurance industry. Additional benefits are created through the increased assurance of coverage, the stabilization of premiums and the improved management of risk through effective loss control.
This Captive, through the active participation of its shareholders, endeavors to provide the long-term security of a well-managed offshore insurance company. To meet this goal, only those providers of services that meet the highest standards of excellence are associated with this Captive.
Structure and Shareholders Involvement
This Captive is licensed and managed in the Cayman Islands. It reinsures risks from the policy issuing insurance company which is licensed and provides coverage in the United States. The types of coverages written by this Captive are Workers' Compensation, General Liability and Automobile.
Each Shareholder, regardless of premium size, will have one vote. A simple majority by the Board of Directors governs. This Captive follows a three year accounting cycle. Each year will stand alone and will be closed by the board of directors. This action normally happens three years after the expiration date of the third year.
This Captive's management strength will be in its strong committee structure and individual involvement by shareholders. Bi-annual meetings are scheduled. The Committees and their primary responsibilities will be:
- Underwriting - Advises the Board on desirable risks to be assumed and ensures that the assumed risks are adequately underwritten.
- Risk Control - Reviews loss control reports and works with members to meet the required loss control goals.
- Finance and Investment - Reviews the bi-annual financial statements and advises the board on investment assets.
Each shareholder is encouraged to attend all meetings and actively participate on the Committee of their choice.
Support Structure/Responsibilities
There are many component parts of a successful program. This Captive uses quality professionals, each with a defined set of tasks, that as a whole create the best program for its members.
This set of professions encompasses the following:
- Captive Resource, LLC. (Consultant) - The consultant, as an independent contractor, has the ultimate responsibility to the Board of Directors to see that all decisions of the board are carried out. They are involved as a non-voting member in all executive meetings and assist the President and Executive Board in the planning of these meetings.
- InterWest Insurance Services, Inc.
- The insurance broker is responsible for all insurance aspects including coordination of policy issuance, billing, and premium collection; placement of coverage not available in this Captive; certificates of insurance; and claim consultation services.
- Kensington Management Group, Ltd.
- The offshore manager is located in the Caymen Island. They are responsible for managing the day-to-day operations which consists of the financial operations and accounting. They also prepare and maintain the corporate and statutory records including meeting minutes. They also advise the members on developments in insurance and fiscal matters as they affect insurance companies in the Cayman Islands.
- National Interstate Insurance Company
(Program Insurance Company) - Issues the actual policies that insure the shareholders of the Company. They are a licensed and "A" rated insurance carrier which takes care of all the legal requirements of providing insurance for the shareholders.
- National Interstate Insurance Company
(Specific Excess Reinsurer) - Assumes the shock loss or large loss layer.
- Pinnacle Actuarial Resources, Inc.
(Actuarial Firm) - Takes loss data supplied by the shareholders and sets a loss projection (loss pick) for each member, based on that members' five year data history.
- National Interstate Insurance Company
(Claims Administration Services) - Negotiates and settles all claims of members based on a set of instructions set forth by the shareholders. Captive Resources will assign a claims service manager from its staff to work with the captive members, coordinate claims review meetings and follow targeted claims.
- Zeigle Consulting Associates, Inc.
(Loss Prevention Services) - This captive has its own Risk Control Committee, which develops standards and goals that members must strive to achieve. This consultant works with the individual members to adhere to the standards and goals set. Good loss prevention will lower the number of claims and therefore lower claim costs.
Premium Development
This Captive has developed an experience rated formula to be used in calculating a member's premium each year. It is based on a member's loss history.
The following is a brief outline:
- The intent of the formula is that each members pays a premium to fund for its ultimate losses but it allows for risk sharing and risk shifting amongst the entire membership for shock losses.
To develop a member premium, each member's previous five-year loss history is collected and the data is then trended and developed by this captive's actuarial firm. They then produce what they believe a member's predictable losses will be plus what should be reserved for shock losses (losses above $75,000) which becomes the member's loss fund.
- Next, the fixed costs of the program such as excess reinsurance, fronting costs, claims service, etc. are calculated for each member.
- Finally, the contributions of that member to the loss fund and fixed costs are added together, producing their premium for each year. In addition to premium charges, a member can be assessed up to a predetermined amount if his expected losses exceed his contribution for the year.
Summary
This Captive through the active participation of its shareholders, endeavors to provide the long-term security of a well-managed insurance company. The preceding is an overview of this Captive and complete details of all operations are available. Through this Captive program, shareholders have indeed taken control of their insurance destiny within a time-tested product that minimizes risk and maximizes profit.
» Contact Mike McStocker for more information.
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