Each business takes on some risk. So when it comes to choosing an insurance plan, your business needs to weigh factors such as its risk tolerance, predictability of losses and focus on loss control. In some cases, it may make sense to consider a loss sensitive plan, which can lower insurance premiums and provide more control of claims. The trade-off is that your company — rather than an insurance provider — has to take on a larger share of the risk. So, before you make a decision, you’ll need to talk to an experienced Frost Risk Advisor who understands the implications for your business.
We’ll meet with you to learn about your company’s claims, financial strength, predictability of losses and risk tolerance. Then we’ll evaluate your options and help you make an educated decision about the best loss sensitive plan for your company. And because of our long-standing relationships with providers, we can negotiate favorable terms for your plan.
A good way to get started is with our online calculator. It only takes a minute or two to find the type of loss sensitive plan that makes sense for your business.
We can help you choose from a range of coverages to find and implement the plan you need.
Guaranteed Cost Insurance
This is the traditional form of insurance, where an insurance provider assumes the risks. Your company pays a fixed cost premium to the provider, and in return the insurer pays 100% of covered losses within the available limits of coverage.
A small deductible plan is similar to guaranteed cost insurance, only the business covers some of its losses. The deductible is typically not collateralized, and losses may be deducted as a business expense.
The insured is responsible for reimbursing the insurance provider up to its deductible amount. From that point, the insurer will pay claims in excess of that amount.
- Deductibles begin as low as $50,000 and may go up to $1 million per claim
- Companies are required to put up collateral to ensure they can cover their share of loss
- Programs have fixed cost premiums, which are determined by companies’ retention levels and stop loss
Retrospective Rating Program
The insured company can adjust its premium to reflect its loss experience during the current period. The provider sets a minimum and a maximum premium agreed upon in the policy, which are significantly lower and higher than traditional “guaranteed cost” premiums.
- Business pays 100% of all covered losses until the maximum out of pocket expense has been reached for the client
- No retained/deductible amount per claim
- Losses can be prefunded (Incurred Loss Retro) or funded at the time of loss (Paid Loss Retro)
This form of self-insurance is established to insure the risks of a parent company or group of companies. Many companies consider forming a captive to save costs, manage their own risk and control their premium and loss dollars. Below are the three most common types of captives:
- Single Parent Captives—The business owns the insurance company and funds any losses it and/or its affiliate companies incur. It has high start-up costs, but can also offer the most significant rewards over time.
- Rent-A-Captive—This offers a way to experience a fully formed captive without investing in start-up costs or initial administrative work.
- Group Captives—Businesses can purchase a share of an established captive, and enter as a group with companies from the same industry (homogeneous) or from various industries (heterogeneous).