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Group Captive Insurance

Countdown to a Correction

Connecticut Construction Insurance prices are about to skyrocket! The perfect storm is coming, but you can avoid it. Join the smartest contractors and consider the Group Captive alternative. Those with the best safety records save as much as 50% off retail insurance prices.

Here is why you have roughly six months to change strategy:

  1. Lower Underwriting Profits – for ’07 and ’08 insurance markets saw negative premium growth for the first time since 1943. The industry reported a $1.3B net loss for the first quarter of ’09 vs. an $8.5B profit in the year-earlier period.
  2. The insurance industry combined ratio jumped to 106% for ’08 (a combined ratio over 100% is unprofitable for insurers).
  3. Investment gains that might offset weak underwriting are non-existent.
  4. Catastrophic losses in ’08 were higher than ’06 and ’07 combined.
  5. Return on Equity (1.2% in ’08) is close to record lows and similar to the levels in the last major hard market (2000-2001).
  6. Reinsurance prices have already started to increase.
  7. Industry underwriting capacity or surplus has shrunk 20% since its peak in ’07 and more shrinkage is expected in ’09.

We are on the verge of a major upward insurance market correction right now.

That means that regardless of your recent safety record, your premiums are going up. This is going to happen to you in a recessionary economy where bid lists are long, margins are tight and backlogs are dwindling. For some contractors this could be the perfect storm for disaster.

That’s not the worst of it. Smarter contractors have realized that the safer they are, the less they pay. Unfortunately, safe contractors are only partially rewarded. Most of the profit they earn either remains with the insurance company or worst of all, goes to their unsafe competitors. In true Robin Hood fashion, insurance companies “steal” from the rich and give to the poor. If you buy traditional insurance products and you run a safe Connecticut Contracting Firm, you are subsidizing the premiums of your unsafe competitors. The Connecticut construction market is tough enough without giving your hard-earned dollars to your competitors.

Here is what a Group Captive can do for you:

  1. You will avoid large and unpredictable market pricing swings.
  2. You will keep your underwriting profits.
  3. You will earn investment income on your premium while it is on deposit.
  4. You will be financially rewarded for your safe operations.
  5. You will not be subsidizing the premiums of your unsafe competitors.
  6. You will never again have to go through the painful and time-consuming process of going out to bid.

Construction Risk Advisors has been a leader in helping contractors save money in Group Captives since 1996. Contact us today for a feasibility study to determine if you can benefit from membership in one of the many Group Captive programs we offer.

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