Alternative Risk Financing, Part 1

Timeline Considerations

There are multiple facets involved in setting up an alternative risk financing or captive insurance structure that logically requires proper due diligence and serious timing considerations to protect everyone’ s business interests.

To ensure the whole process runs as smoothly as possible, the captive industry experts suggest the shortest timeline to establish a captive insurance vehicle is six weeks post a captive feasibility study. Considering the critical nature of the feasibility study component within building a captive program, and that the feasibility study process alone will take four to six weeks, a rational assumption for building a meaningful captive model is three to six months start to finish.

Conclusion As indicated previously, there is a growing interest today, on a worldwide basis in captive programs considering the volatile traditional insurance market. In fact, with regard to supporting the emergence of captive solutions in our marketplace, we need to recognize one of the leading commercial insurance agent / brokers serving the U. S. CR / ST marketplace, USI Insurance Services, for their recently well prepared and delivered webinar sponsored by the Specialized Carriers and Rigging Association, entitled” Captive Insurance Programs: Is Your Company Captive Ready?”

USI made a highly insightful and professional presentation on captive insurance and risk management for crane, rigging and specialized transport operators in this webinar. USI is considered a market-leading insurance agent / producer of risk management-based insurance in our marketplace for over the past 30 years. The USI presentation emphasized a key element in captives having the ability to unbundle risk services for the customer / user to tangibly mitigate their risk.

We should recognize Jeff Haynes, Randy Proos and James Stovall for making this important presentation in support of alternative risk financing methods to protect the futures of crane-rigging and specialized transport customers.

This concludes the first edition of this three-part article series. Part two will cover a five-step primer on how to set up a captive structure in your organization, including the different types of alternative risk financing vehicles and the importance for conducting a formal captive feasibility study for your organization in preparation for alternative risk financing.

Kevin Cunningham is president and CEO of Crane Risk Services, and has 27 years of experience in crane risk management. He can be reached at Kevin @ craneriskservices. com.

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