Captives Offer High Net Worth Individuals Control
About a year ago actor Tom Hanks and his wife Rita Wilson sued their insurance agency for gross overcharging of various policies. Hanks and Wilson used the same California agency for more than 20 years to procure homeowners, directors and other business policies. When changing over to another broker, the new firm allegedly discovered the overcharges. The suit claims that the previous broker insured them multiple times for the same things, and engaged in a “predatory embezzlement scheme” that cost all the plaintiffs hundreds of thousands if not millions of dollars.
The outcome of the suit is unknown, but among the insurance world, including on forums such as LinkedIn, there was a lot of discussion, including the need for high net worth clients like Hanks/Wilson to consider setting up a captive.
It’s estimated that about 51% of the commercial property/casualty market is in the alternative risk market. In fact, there were hundreds of new captives licensed in 2011 even during our faltering economy. Captives are extremely popular with estate planners, and many high net worth individuals use captives.
Another method by which risk to loss is financed, captives allow individuals to control their own money. If an individual has the financial ability to finance a large portion of your own risk, and the ability to manage those risks, he/she can save a lot of money with a captive. Another advantage of a captive is that individuals can obtain coverages that are either not widely available or properly priced in the marketplace. Coverage gaps can also be filled. And last but not least, there are tax benefits as well.
At Caitlin-Morgan we provide a variety of captive solutions depending on the client’s needs. We work with many retail agents to set up captives on behalf of their customers.
We can provide the following solutions:
- Risk Retention Group
- Single Parent Captive
- Association Captive
- Agency Captive
- Protected Cell Captive
- Series, LLC Captive
Give us call at 877.226.1027 to discuss the various options available to your clients that should be looking at a captive.