Can You Buy Workers Compensation From Captive Insurers?

Captive insurance companies have provided savings on business insurance for decades. Whether you are looking for a sole captive or partnership in a group-owned company, the ability to dial in underwriting costs and recoup profits is a powerful tool for maximizing employee benefits while controlling your budget. What you might not realize is that you can actually establish workers comp captives in states without a monopoly on the program.

Control Costs on Workers Compensation

Keeping the cost of workers comp insurance down is difficult when the state mandates participation in the program. Not only do the benefits have to be essentially unlimited in the event of accidents that create ongoing medical issues, it can be hard to dial in the right quote if you don’t have a long company history to use as a basis for your average claims. Young companies often find that just one or two bad years can swing their safety records hard enough to increase premiums sharply for several years after. It’s a lot harder to maintain a consistent average across two years than it is across five or ten, after all. Workers comp captives solve this problem because your business owns the captive, so it recoups any profits that result from overpayment for the policy. That makes it easy to err on the side of caution when setting up your policy.