QBE North America Shares Five Key Benefits of Captives in Healthcare Strategies

PR Newswire

NEW YORK , May 6, 2024 /PRNewswire/ -- In the realm of employee benefits, the trend towards self‑funded healthcare is unmistakable, as the regulatory landscape continues to change and healthcare costs continue to escalate. The National Association of Insurance Commissioners estimates that approximately 90% of Fortune 500 companies have captive subsidiaries. To clarify this trend, QBE North America, a leader in the insurance sector, explains why captives are vital in healthcare strategies. Captives are specialized insurance subsidiaries that companies use to manage risks more effectively and economically.

"Captive insurance solutions are gaining traction because they allow employers to maximize control, spread risk and enhance negotiating power," says Tara Krauss, head of accident and health at QBE North America. "With a self-funded health plan, companies are not just buyers of insurance, but stewards of risk management."

QBE North America's five reasons to choose captives for employee benefits include:

Frictional Cost Reduction
Utilizing captives in healthcare strategies leads to a reduction in frictional cost associated with employer sponsored health insurance. By self-funding the health plan and using alternative funding for medical stop loss – a form of reinsurance that limits claim coverage – through captives, employers can optimize gross written premium with the reduction of certain expenses, taxes, and underwriting margin.
Enhanced Risk Management and Long-Term Stability
Both single-parent and group captives empower employers with control over their risk management, especially in employee benefits. The inclusion of stop loss in a captive setting enhances an organization's opportunity to strategically manage risks associated with employee benefits. Captives have the potential to absorb liability that may come in the form of an alternative specific deductible for a particular condition and create more opportunity to control related expense through a variety of point solutions.
Customization and Flexibility for Employers
Employers can tailor medical stop loss coverage through captives to meet unique needs. This flexibility includes customizing stop loss contracts based on needs, choosing service providers, setting coverage levels and managing financial surplus.
Efficient Financial Utilization and Dividend Returns
Single-parent captives can enhance underwriting profit and investment returns from medical stop loss layers. Surplus derived from the captive's performance can be returned to the employer through dividends, distributions or strategically deployed to offset future plan costs, expand benefits or manage financial volatility. This efficient financial utilization enhances the overall value proposition of captives in healthcare strategies.
Leverage with Carriers and Service Providers
Single parent captives provide great leverage for negotiating premium, limits and terms. Captive owners may assume a risk layer in their captive vehicle instead of transferring it to a reinsurer if it is believed to be risk worth managing. Group captives also allow employers to collaborate for better terms with carriers as well as service providers. This collaboration is especially beneficial for mid-sized companies, offering them volume‑related discounts and pricing stability.

QBE specializes in underwriting single-parent and industry-specific group captives. This includes healthcare, hospitals, higher education and energy sectors. Their integrated approach in program management, coupled with a skilled team, ensures responsiveness to customer needs. For more information, please visit here .

The information and recommendations presented herein are for general informational purposes only. QBE North America assumes no liability in connection with your use or non-use of such information and does not guaranty that the information includes all possible risks or unusual circumstances that may occur. QBE North America is the marketing name for QBE Holdings, Inc. and its subsidiaries. QBE and the links logo are registered service marks of QBE Insurance Group Limited. © 2024 QBE Holdings, Inc.

About QBE North America
QBE North America is a global insurance leader helping customers solve unique risks, so they can stay focused on their future. Part of QBE Insurance Group Limited, QBE North America reported Gross Written Premiums in 2023 of $7.6 billion . QBE Insurance Group's results can be found at qbe.com . Headquartered in Sydney, Australia , QBE operates out of 27 countries around the globe, with a presence in every key insurance market. The North America division, headquartered in New York , conducts business primarily through its insurance company subsidiaries. The actual terms and conditions of any insurance coverage are subject to the language of the policies as issued. Additional information can be found at qbe.com/us or follow QBE North America on LinkedIn , Facebook and Instagram .