Case Studies

Group Captive

A group of 50 physicians are tired of seeing their malpractice premiums yo-yo up and down 40% or more every four to five years. Collectively they pay about $1,500,000 in premium each year. The wide swings in premium have a material impact on both the budgeting and profitability of the group.

Reviewing the collective claims experience of these physicians reveals that they have a better than average risk profile. Over the past five years, this group of 50 doctors has been sued only 7 times. During that same 5 years, they collectively paid $7,500,000 in premiums but their insurance company only expended $1,500,000 in defense and settlement of the 7 claims.

This group of physicians is ideally suited to use a captive insurance company. They will be able to set premiums at rates that will remain level for years to come, and given their loss experience, the captive will make money over time. Within a few years, these physicians may be in the extremely satisfying situation of continuing to accumulate capital in the captive or reducing their premium to below market rates.