In part one of our captives blog series, we’ll define captives, explore why you might join one and examine the different types of captives.

At Gregory & Appel, it’s our job to find the best risk transfer program for our clients – and for many, the traditional market is the right fit. But for companies looking to have more control over their insurance costs, alternative models may be available.

What Are Captives?

Think about how you buy traditional insurance. You pay the insurance company a premium and regardless of your own loss activity those premiums often fluctuate year-to-year, depending on the state of the market. Many companies and executives are becoming increasingly frustrated with a lack of control over what influences the price of their premiums and what, if anything, they can do about it.

Think of a captive as a group of companies coming together to create their own independent insurance company. Instead of choosing to buy insurance from a third party, this group pays into a fund that consists of contributions from every member. If there are leftover funds after every organization’s claims have been paid out, each member would then get a share back. This benefit is one of the main reasons some companies are choosing to leave the traditional market.

Why Captives?

Consider this: If you own the insurance company (like you would in a captive), you’re actually paying yourself that premium. The money that the insurance company makes usually comes from both underwriting profits (when your premiums outweigh your claims) and investment income (when they’re taking your money and investing it over time).

In a captive scenario, your company is getting both the underwriting and investment income. And not only could you see more dollars come back to you, but you also have a say in how your premiums are set. As a captive owner, you would have control over your insurance company and would not be subject to wild fluctuations in the marketplace.

Are All Captives the Same?

There are many different kinds of captives, so we’ll break each one down for you below.

Single-Parent Captives (aka Pure Captives)

Owned entirely by one organization, they provide insurance exclusively to that owner.

Segregated-Cell Captives

May have more than one owner and they provide insurance to the owners of each cell.

Group Captives

Made up of multiple organizations (either similar or dissimilar in size or industry) who band together to buy insurance as a group. This is the solution we recommend to most of our clients and what we will focus on throughout this blog series.

Did You Know?

Captives can also be a creative solution for your employee benefits plan! And with the average time for returns in a group medical captive being 18 months, it’s an option you’ll definitely want to explore. You can read more about captives for employee benefits in part four of this series.

We’re firm believers in transparency, so we acknowledge that captives aren’t a magic solution and they aren’t a good fit for every company. There are calculated risks involved that should be fully explored prior to entering this type of strategy. And that’s why we’re here – to take the mystery out of alternative risk.

Click here to continue reading in part two, “Learning More About Group Captives.”

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Or, to view any entry from this six-part series, check out the links below.

• Part 1: Breaking Down the Basics
• Part 2: Learn More About Group Captives
• Part 3: Addressing Common Misconceptions About Captives
• Part 4: Captives as an Employee Benefits Solution
• Part 5: Is a Captive Right For My Business?
• Part 6: Preparing to Join a Captive

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

In part two of our captives blog series, we’ll examine the current market conditions and why a group captive could be the right risk management solution for your business.

Current Market Conditions & High Premiums

We know the insurance market is hardening, meaning rates are increasing and underwriting is becoming more difficult. The hardened market results in smaller coverage limits and higher premiums for businesses. If your company wasn’t prepared for the current market, don’t worry – you’re definitely not alone.

After facing increased premiums year after year, we found that some businesses had outgrown their long-standing policies and were in need of a more consistent, cost-saving solution.

We’re encouraging some of our clients to consider group captives as a solution to the hard markets we’re facing. Although not every organization has the capacity to join a captive, they’re an option you should research if you haven’t already.

Understanding Group Captives

You read previously that a group captive is essentially a group of companies coming together to create their own independent insurance company. They can be an efficient way for middle-market organizations to both assume and transfer some risk.

The way most group captives work is they collect each member’s premiums and then divide them into two “buckets” from which they pay claims. The larger one is for smaller, more frequent claims, while the smaller bucket is reserved for expensive, catastrophic claims.

The standout benefit is that these buckets are usually created based on an actuary’s calculations, using your own claim experience history. This differs from traditional insurance in that insurance companies use generalized rates that are applied to multiple organizations and will fluctuate with market conditions.

Say another group member goes beyond their predicted claims for the year. Your premiums are used for your claims and help if you or another member of your group captive has claims exceeding their budget. There is typically a minimum and a maximum, so you would already be aware of the best- and worst-case scenarios. Then a reinsurer contracts with the group to pay for claims that are beyond the limits of the premium buckets, if necessary.

Lowering Premiums

The best news? If you’ve worked hard to keep your claims low for the first five years of your captive membership, and you continue to do so, your premiums come down. If you continue to decrease your claims year by year, your premiums will follow suit. And what’s even better, in member-owned captives underwriting and investment income are typically returned to members who have good claim experiences, so that as costs are decreasing, underutilized premiums are given back to you!

In a group captive, each member shares risks with the group they have joined. You wouldn’t want to share risk with companies that aren’t properly managing their claims. Partnering with like-minded group members who are proactive about risk management is vital.

We think of captives as a long-haul strategy. They require great planning and preparation, but can eventually pay off in the form of improved claim numbers, a return on premiums and access to invaluable resources, among many other ways.

Click here to continue reading in part three, “Addressing Common Misconceptions About Captives.”

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Or, to view any entry from this six-part series, check out the links below.

• Part 1: Breaking Down the Basics
• Part 2: Learn More About Group Captives
• Part 3: Addressing Common Misconceptions About Captives
• Part 4: Captives as an Employee Benefits Solution
• Part 5: Is a Captive Right For My Business?
• Part 6: Preparing to Join a Captive

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

In part three of our captives blog series, we address some common misconceptions as shared by our clients.

Like any person in your shoes, you’ve probably had (or heard) the following thoughts:

• “You’ll pay more because of other people’s claims...”
• “Your claim experience isn’t good enough...”
• “You don’t pay enough in premiums...”
• “You’re too big for a captive...”

Addressing These Misconceptions

Paying for Others’ Claims

Yes, it’s true that you may be sharing risks with other businesses, depending on the type of captive you’re in, but this doesn’t necessarily mean that will cost you more.

The beauty of a captive is that you’re paired with like-minded peers who are all trying their best to minimize their own risk and work their own claims as efficiently as possible. Every business has bad claims now and then – there’s no escaping it. In a group captive, you will always help your captive peers pay claims. But they are also there to help you pay yours when you have a year with high-cost claims, and since each captive also buys reinsurance, the captive and its members are protected from those rare, high-cost claims.

Claims Experience

One bad year of claims won’t rule out captives as an option. However, a history of several high-cost claims may cause a detour. If you find yourself in this position, don’t panic. An experienced broker can work with you to improve your company’s safety procedures and claim management, and help you get where you need to be in order to join a captive.

Premiums/Size

We hear this from new clients all the time. Somewhere down the line, someone tried to talk them out of captives because their business was “too small” or because they didn’t spend enough on premiums. The reality is that captive groups come in all sizes and span across different industries, so your insurance spend really shouldn’t be the deciding factor.

Are Captives Really Worth It?

Two of the main concerns about captives are that they’re an enormous time commitment and require ownership to be very involved.

The truth is, this alternative risk strategy may or may not be right for your organization, based on many factors. The reality is that if you choose this route, you may have to go to board meetings. It’s possible that offshore travel may be required because some captives are domiciled overseas. Also, the attention that you give your claims is probably going to be greater when it’s your money at stake versus when it’s the insurance company’s money paying out claims.

There’s definitely a commitment of time, energy and resources. That being said, our experience indicates that the payoff (or payback to the owners of the captive) is significant and considerably worth the effort.

Click here to continue reading in part four, “Captives as an Employee Benefits Solution.”

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Or, to view any entry from this six-part series, check out the links below.

• Part 1: Breaking Down the Basics
• Part 2: Learn More About Group Captives
• Part 3: Addressing Common Misconceptions About Captives
• Part 4: Captives as an Employee Benefits Solution
• Part 5: Is a Captive Right For My Business?
• Part 6: Preparing to Join a Captive

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

In part five of our captives blog series, we use some real examples to show the value of joining a captive.

At Gregory & Appel, we helped our first client into a captive in 2004 and we’ve seen it all since then. Not to mention our professional advisors have over 50 years of combined experience specializing in alternative risk transfer.

We understand joining a captive requires time, strategy and money – especially in the beginning. And that’s not to say you won’t see those investments return in a few years. Our clients have seen improvements not only in premium savings but across the board. The structure of captives forces you to take a hard look at your internal policies and procedures and make necessary adjustments on a routine basis. So yes, this will take more time and energy, but your business will be better for it.

Of our expansive client base, only one has left their captive to return to the traditional market, only to request to rejoin a few years later. That’s pretty indicative of how these captives work. Once you’re in, you really want to stay. If you continue to pay attention to your claims and stay on top of risk management, you have a real opportunity to recover some of your premiums.

Not only do your premiums go down, but all those dollars that you don’t spend on claims come back to you.

Show Me the Numbers

Let’s take a look at this distributor company who came to us with only workers’ compensation. We introduced them to a captive group in 2006 and 15 years later their premiums had been cut in half over that period of time – even though their exposures had doubled, which in their case were payroll, sales and number of vehicles.

Almost immediately after they joined the captive, the Global Financial Crisis hit in 2007. Naturally, their premiums went up over the next few years but then began to stabilize until they doubled their coverage in 2011 by adding on general liability and auto policies. As you can see in the chart below, their premiums continue to decrease after this bump in coverage because they were really focused on loss control, maintaining safety procedures and risk management.

They ended up paying half as much for twice the amount of insurance (now including workers’ comp, general liability and auto).

The takeaway here is that being in a captive encourages you to manage your own claims in a way that will allow your premiums to decrease over time as well as get some of the money back that you didn’t spend on claims.

Considerations

Here are seven points to help determine whether a captive may or may not be a good fit for your business.

If you can relate to one or more of the following, then you may want to reconsider captives or meet with an experienced advisor to see if it’s a viable option.

1. You’re not comfortable with team decision-making.

This can be a tough concept for some, especially if it’s not in your DNA. You don’t always get to call the shots when you’re in a group captive. Every member is given an equal opportunity to weigh in and vote on important matters. Fortunately, each captive member only wants the best for their group.

2. You do not spend enough on premiums.

There isn’t an exact formula to tell you whether or not you’ll be successful in a captive. However, we’ve found a good rule of thumb is that your company should be spending at least $100,000 annually on workers’ compensation, general liability and auto coverage for this type of insurance to be beneficial.

3. You have poor claims history.

Keep in mind that a poor claims history doesn’t permanently rule out captives as an option – it just means not at this time. Working with a risk management company will help get your company’s claims back on track and prepare you for the stringent requirements of group captives.

4. You can’t make the time.

There are several time commitments required, for example attending annual board meetings and other in-person gatherings that may or may not be offshore. You should also consider the amount of time it takes simply to research and understand the captive and all its available resources.

5. You do not have a strong financial base.

Captives are best suited for companies with strong financials and have the ability to withstand paying a portion of their claims.

6. You’re joining solely for tax purposes.

This is NOT an investment or a way of receiving tax benefits. Captives are strictly an insurance product. Whether or not they offer tax benefits for your organization should be determined by a CPA or qualified tax attorney.

7. You’re focused on short-term goals.

Captives are built for the long haul. Typically, distributions don’t begin until 3-5 years after the end of a policy year for commercial insurance captives (Employee Benefits captives might have a shorter schedule), so it’s best to have the long game in mind when getting started.

Now, remember, we’re not trying to steer you away, just making sure that you fully grasp the commitment required of a captive member. If you're ready for guidance on the required preparation for joining a captive, read on.

Click here to continue reading in part six, “Preparing to Join a Captive.”

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Or, to view any entry from this six-part series, check out the links below.

• Part 1: Breaking Down the Basics
• Part 2: Learn More About Group Captives
• Part 3: Addressing Common Misconceptions About Captives
• Part 4: Captives as an Employee Benefits Solution
• Part 5: Is a Captive Right For My Business?
• Part 6: Preparing to Join a Captive

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

In part six of our captives blog series, we walk through the steps you will take before forming or joining a captive and help you steer away from common pitfalls.

We realize the decision to join a captive isn't made overnight. Creating or joining a captive requires extensive discussion and preparation from your leadership team – but this effort won’t be in vain. Improving an organization’s overall safety is a common byproduct of entering a captive as most require every member to have their own safety committee. Also, since it’s their own money at stake, companies typically nominate someone internally to be their dedicated safety contact in addition to other roles.

Getting Your Leadership on Board

It's critical that your leadership team understands how safety affects your bottom line and how captives can play a major role in saving you money for years to come.

Sound safety practices and claims management both protect the wellbeing of your employees and are good for your business. Research and industry experience suggest businesses that invest in health and safety programs realize a tangible return. These returns stem from:

Decreased Lost Time

Safety programs can reduce worker injuries and incidents, allowing companies to decrease expenses related to medical care, PTO, litigation and disaster mitigation.

Compliance With Regulation, Laws & Standards

Non-compliance can be disastrous, impacting an organization financially and damaging their reputation. Avoiding legal fees and fines from OSHA or other regulatory agencies help maintain a healthy bottom line.

Increased Operational Efficiency

A focus on safety leads to higher productivity, which drives short-term revenue growth and supports long-term sustainability.

Improved Employee Satisfaction

Recruiting and retaining top talent is easier for organizations that provide safe and comfortable workplaces, care for employee wellbeing and take steps to protect the environment.

Positive Reputation

Employers want their employees, customers and the public to view them as safety-focused.

Between webinars, workshops and an experienced broker at your fingertips, you’ll have all the resources available to help you reduce your overall risk and lower your audit factor, which in turn will help lower your premiums. You’ll work together with your broker to establish and regulate procedures that not only save you money in the long run but – more importantly – keep your employees safe.

But for now, we wanted to arm you with enough information to educate your team and begin having these preliminary discussions. You can always reach out to an experienced risk advisor if you have specific questions or just want more information.

Finding the Right Broker

Now, this may be the most important step. If you are seriously considering the captive option, it’s essential that you join the right captive with the right broker for the right reasons.

The right broker should have enough experience to be able to guide you through the process and answer all of your questions and be able to make the right connections. You also don’t want someone who will set you up with a group and then send you on your way. You want a broker who will be there for you – every step of the way.

Between the initial interviews, regular board meetings and risk control workshops, you’re going to have questions – it’s inevitable. If your broker isn’t attending those events, then they will not have the knowledge to answer those questions.

Ultimately, you need to find a broker who has the experience and is willing (and able) to join you on your journey.

To help you navigate these conversations, we’ve compiled the following list of questions to ask your potential broker:

• How long have you been working with captives?
• How many clients do you have in a captive?
• How many different captive groups do you work with?
• Are you willing and able to attend captive-related events such as board meetings?
• How will you identify which captive is right for my business?

Their answers should help you determine their credibility and whether or not they’d be a good fit for your organization.

How to Identify an Inexperienced Broker

Unfortunately, some brokers will try to talk to you out of a captive simply because they’re not familiar with them and don’t want to lose your business. We hear this all the time from leaders who have inherited insurance partnerships based off old relationships.

Captives are a complex, alternative risk strategy and you are going to want an experienced broker to help guide you through the process. Metaphorically speaking, it’s like letting your primary care physician perform brain surgery on you.

That’s why we’ve compiled a list of phrases our clients have heard to help you identify INEXPERIENCED or MISGUIDED advisors:

• Your claim experience isn’t good enough.
• You’ll pay more because of other people’s claims.
• Your broker can’t provide numbers to validate a historical return/dividend.
• You don’t pay enough premium.
• You’re too big for a captive.
• That big claim is going to increase your captive cost.
• All captives are an 831(b).

If you’re ever given one of these examples as a reason not to join a captive, don’t hesitate to get a second opinion.

The Process of Joining a Group Captive

If you have ever received competitive proposals on your insurance program, you have already been through 85% of the work required to get a captive proposal. You will find the process is very similar – a captive group is just going to look a little closer and ask more questions than a traditional insurance company.

Information Gathering

We talked about an actuary being involved and that’s actually a good thing for you as long as your organization has controlled its claims over the last five years. The actuary will look at your claims relative to your exposure (payroll, sales, number of vehicles) to calculate your premiums. Their job is simply to make sure the group will have enough dollars in the buckets to pay for every member’s claims.

There are no market forces at work here, so the “debit & credit” work that traditional underwriters do, based on the market and their individual profitability, goes away. That’s why the information gathering may be more detailed during this stage.

You can also expect some questions about your organization’s finances. Most captives will have an independent consultant review your company’s audited financials. Since the captive is taking a risk with each new member, the established members want to make sure that every company they admit will be able to pay their premiums and weather the group’s financial requirements.

Rest assured that your financial information is not shared with anyone beyond the consultant performing the review. Captive groups take the protection of this information very seriously!

You should also prepare for questions about your risk control efforts. Most groups have their own list of questions they ask all prospective members based on what is important to that captive. For example, if you are looking to enter a trucking captive, you can bet that they are going to ask you about driver qualifications!

Timing

The last thing you want to do is to go through all the work of learning about a captive, gathering data for a proposal and then not have enough time to thoughtfully consider joining.

A broker who is well-versed in this process will tell you to schedule your captive proposal as close to 30 days before your insurance expiration date as possible. They’ll do this for a few reasons:

You’re not buying traditional insurance. You’re joining a captive, which is a long-term proposition. Any serious commitment requires more time for consideration.

You need time to talk to other captive members about their experiences. And if the timing is right, you may want to attend one of their meetings so you can talk to other members face-to-face.

You may want to have your business advisors review the group. You’ll need to give your accountants, attorneys, etc. ample time to research and share their opinions.

You need to consider your overall insurance program structure. If you join a captive, you might be leaving a “package” you have with your traditional insurance carrier. Even an experienced broker will need a few weeks to restructure your program and build out the remaining coverage around the captive.

It will get you in the habit of not renewing your insurance at the last minute. If you join a captive, those days are over! You will receive your renewal costs around a month before the expiration date of your current program, so you’ll be able to experience what it’s like to have time to make a decision.

Advice for People Considering Captives

Don’t wait! Almost every time one of our clients gets into a captive, they tell us they wish they would have done it sooner because the captive’s structure actually makes them a better company from a lot of perspectives – not just from an insurance standpoint.

Think about it. If you’re with a group of like-minded peers and everybody’s trying to get better, you’re sharing all of these ideas and best practices that can help transform you into a better company. And that’s just one of many examples of how captives can help elevate your business.

So certainly, you should consider it. Start researching. Talk to someone who’s qualified. Start having those internal discussions with your leadership team. A captive might not be as far-fetched as you originally imagined.

Look for full disclosure and transparency when examining captives as an option for your organization.

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That’s it for our series on captives. To view any of the previous entries, check out the links below.

• Part 1: Breaking Down the Basics
• Part 2: Learn More About Group Captives
• Part 3: Addressing Common Misconceptions About Captives
• Part 4: Captives as an Employee Benefits Solution
• Part 5: Is a Captive Right For My Business?
• Part 6: Preparing to Join a Captive 

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

For the purposes of this article, we’ll assume two things are true: 

1. Your organization invests significant time and money into offering employees a high-quality health insurance program in order to attract and retain top talent.
2. Managing the cost of this investment is incredibly challenging.

If you are fed up with the huge increases in premiums that have become so common in today’s insurance market, you are far from alone. Another common frustration is the lack of insight you likely receive into claims data on your plan. Or maybe this better describes your situation: you currently self-fund your health plan and are overwhelmed by the stress of managing volatile, high-cost claimants?

If you answered yes to any of these questions, a group health captive arrangement is an alternative risk model worth your consideration.

Captives are growing in popularity, and it’s easy to see why. This strategy gives employers a better chance to manage the volatility that can occur with a group health plan, with the end result being a more competitive health insurance plan to offer current and prospective employees.

While the sweet spot has historically been in the 50-250 employee range, larger employers are finding success with group health captives because of the unique contractual financial protections built into the solution.

How It Works

The key: keep things simple. Group health captives come in all shapes and sizes, but they all operate in a similar manner. Members of a captive use their shared size and scale to pool risk in the stop-loss market in an effort to improve pricing terms and add contractual protections such as a competitive annual rate cap and can even offer a provision to help you avoid a new laser at renewal.

In most cases you’ll keep your key partners in place, including your medical TPA, your health plan network and your pharmacy benefit manager. Captive members also benefit from having access to national best-in-class cost containment partners which can lead to lower healthcare costs. Finally, captive members have opportunities to network at annual member meetings, where they can learn best practices to implement with their own organization.

Here are a couple more things to consider:

• Say your organization fully-insures its health plan and you are interested in looking at self-funding with a captive arrangement. In that case, it is recommended to complete a feasibility study to understand if self-funding makes financial sense at this time. Your employee benefits consultant can assist with that analysis.
• If you are already self-funding and have historically purchased stop-loss insurance, the contractual provisions built into a group captive’s stop-loss contracts are often superior to what you can purchase on your own. The rate cap, in combination with a no new laser at renewal provision, can buy you enough time to plan ahead for a known, recurring high-risk claimant.
  

Curious if a group health captive is feasible for your organization?

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

It can often feel like storm clouds are gathering, and we’re being squeezed between increasing risks and rising costs. There are a few advanced tactics that can help save you money while increasing your organization’s sustainability. We gathered a solid panel of advisors who shared their tips on how you can leverage communication, safety and risk management to lower insurance premiums while engaging your workforce.

Here’s a recap of their best advice:

1. Expand your hiring pool. Instead of paying expensive staffing fees, try building talent pipelines with local schools, churches and other community agencies to recruit untapped talent. Make connections with community organizers and continue to nurture these relationships.
2. Be present & lend a hand when times get tough. Servant leadership is contagious, and organizations with active leaders (who are not afraid of rolling up their sleeves when duty calls) see higher levels of morale and productivity.
3. Leverage safety to help reduce turnover. People want to feel valued and protected. High performers will seek out organizations with a safety-focused culture and environment. An effective safety program can also make current employees feel more connected to the organization and less likely to leave.
4. Establish (or revive) your return-to-work policy. Allowing injured employees to return to work sooner with proper modifications can not only lower your workers’ compensation costs but help support your staff with a full salary rather than a percentage for disability. It’s a win-win!
5. Insured costs are just the tip of the iceberg. The real costs of accidents stem from property damage and a combination of investigation time, legal fees, training replacements, overtime and more – all of which can be monitored and controlled with proper risk management.

We understand that these suggestions are not “one size fits all”. For specific details on how to implement them in your organization, reach out to your G&A service team – we’re always here to help!

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Most business leaders are likely already aware of the roles U.S. inflation and the increase in global catastrophes play in insurance premiums, but now there’s another factor at work: reinsurance.

Treaties on reinsurance for property coverages (which is a mechanism the insurance carriers use to offset the risk of the policies they write) were finalized in early January 2023, and it was the highest YoY increase that we’ve seen since 1992, averaging 37% globally. Higher reinsurance rates for carriers typically means higher commercial property premiums for the average business are on their way – beginning as early as your next renewal.

Why is this an issue now?

Insurance companies negotiate annual treaties with reinsurers, and nearly 40% of all treaties take place in January. These treaties are structured to provide insurance companies with the guidance and authority needed to operate throughout the year without having to submit every policy to the reinsurer for review.

Based on initial reports, negotiations for the 2023 January treaties increased global reinsurance rates by 37-40%. Due to the increased occurrence of wildfires, hurricanes and flooding in America, treaty renewals for the U.S. went up between 45-100% on average. In addition to higher premiums, the reinsurers have also placed more stringent restrictions on the types of coverage available.

What does this mean for an insurance buyer?

While not every penny of the premium paid by the client goes to pay for reinsurance, insurance companies do have a significant cost to offset their increased reinsurance rates. In addition to higher reinsurance premiums, insurance companies may now have to bear more of the severe claims, which will likely be funded through increased rates to the average insurance buyer.

The next major treaty negotiation will occur on April 1, so more information is soon to come – but the horizon looks dark for property insurance premiums. Be sure to give yourself and your team ample time to prepare for the possibility of a 20-35+% property premium increase before your next renewal discussion.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

With OSHA’s recent fining of Amazon and Tesla, we wanted to provide recordkeeping best practices and incident-reporting regulations to help keep your organization compliant. We recently hosted a live event with a panel of safety and risk management professionals – check out the highlights below.

Upcoming deadlines: Most employers with 10+ employees are required by OSHA to complete Form 300A and post in the worksite from February 1-April 30. Employers aren’t required to post the entire log but are required to display a summary of all 2022 work-related injuries until April 30. Copies of the form should be provided to any employees who may not see the posted summary because they do not regularly work onsite.

Reporting timelines: Employers must record on-the-job injuries and illnesses within 7 calendar days of receiving notice of the injury or illness. All employers are required to notify OSHA when an employee is killed on the job or suffers a work-related hospitalization, amputation or loss of an eye. A fatality must be reported within 8 hours, and any in-patient hospitalization, amputation or eye loss must be reported within 24 hours.

Tracking incidents:Tracking “near-misses” and not just accidents and injuries can be a great way to address problematic areas or procedures and help prevent accidents & injuries before they happen. Using tracking software like our KPA Risk Management Center software takes out the guesswork and ensures you’re recording the appropriate information for the situation.

Contracts: Having a contract and exchanging proof of insurance is key to maintaining relationships with third-party administrators and staffing agencies. These partners should have their own general liability and workers’ compensation, as well as auto if they are driving for you. Remember, insurance follows the vehicle, not the driver.

Reach out to your G&A Service Team for more information about OSHA regulations and upcoming deadlines or for a trial of our KPA reporting software.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.