January 2015

Over the last two weeks, we have put forward the thesis that most small and mid-size businesses are underinsured and that for many, the best remedy is to own their own captive insurance company.  Owning a captive insurance company enables small and mid-size business owners to blend third party commercial coverage with coverage by their captive.  This blended approach results in far more robust coverage, helps overcome the “sunk costs” trade-off of purchasing insurance, and can even turn risk management into a profit center.

By Sean G. King, JD, CPA, MAcc

Principal & In-House Counsel, CIC Services, LLC.

At its extremes, the captive insurance industry is currently divided into two camps.  In recent years these two camps have made war on one another to their respective detriments.  The purpose of this essay is to describe the two camps, elaborate on the origins of the war, forecast its inevitable outcome and call for a truce.

It’s well understood that wars make or break countries.  What’s not so well understood is that wars and conflicts can make or break businesses and business owners as well.  Last week, we noted that “in increasingly uncertain times, most small and mid-size businesses are underinsured.”  Our thesis was further hammered home by an article last week in Captive Insurance Times  that emphasized

As we begin 2015, one thing is certain.  Businesses face increasing uncertainty in today’s interconnected global economy.  Recent headlines have been dominated by terrorism, data breaches, cyber-crimes and employment lawsuits.  Unfortunately, most small and medium size businesses are underinsured.