Economist Theodore Levitt once said that “creativity is thinking up new things, but innovation is doing new things.” In the business world, fresh new programs help move organizations ahead. Using the same old tactics may feel reassuring, but proactively directing change—before change is inevitable—helps companies take control of their destiny and become less reactionary.
In the insurance industry this philosophy is vital. Perhaps that’s why nearly all Fortune 500 companies, thousands of mid-sized companies and many small businesses use alternative risk transfer captive insurance. In fact, AM Best Company estimates there are currently more than 7,000 major companies using captives around the globe. Simply stated, this means using techniques and strategies that are not considered ‘traditional’ (including re-insurance) to protect companies’ inherent risk. This market includes many groups, including non-traditional products offered from industry leader eMaxx, a tech-enabled provider.
One great feature of a captive insurance risk transfer is that it allows businesses to buy coverage and then move that risk without using traditional policies. This is very different from the historical way businesses handled risk—by handing it over to a policy provider or setting up self-insurance. However, fluctuations in the marketplace sparked creativity, which led to innovation called captives. This special type of company is set up by a parent company to cover the risks of its owners. The insured are the insurers. It gained great favor about 40 years ago and continues to dominate the market today.
By implementing a transfer plan insurance captive, business can retain the funds that would have been spent on premiums. This creative idea has its roots in the steel industry of the 1950s, when businesses realized that by using this new form of coverage, they could reap profits from a regular line-item expense: the cost of coverage.
Of course, risks vary among industries. But for those companies where risk is ominous, this idea is a game-changer. This includes niche markets such as energy, transportation, towing, utilities, recycling, construction and crane and rigging. Countrywide, eMaxx partners with hundreds of clients in these areas and, as a result of their participation in alternative risk transfer captive insurance, they have enjoyed a 46% reduction in frequency and significant impact in the severity of claim outcomes. Investment accumulates. Clients become members who participate on the board of directors and governing committees. And operating costs are reduced.
By combining state-of-the-art technology with top-drawer claims management and litigation, eMaxx offers a strong nationwide option to a stagnant way of providing coverage. Create and innovate your company’s destiny by contacting eMaxx today.