Why Health Insurance Captives Are a Better Health Option for Your Fleet

Scott Rea sat down with Brisk Management Services founder Bob Bernatchez about insurance captives, a growing alternative to traditional insurance for trucking carriers. They discuss what a captive is, if joining one is right for your company, and the benefits of being a member.

An insurance captive is, as described by Bernatchez, "a do-it-yourself insurance company, generally... created for the benefit of the owners." The owners take on more risk than in a traditional insurance setup, betting that they will outperform the standard performance of trucking carriers from a safety and accident (loss) standpoint.

Companies may want to look into joining an insurance captive if they meet certain criteria. Bernatchez explains that companies should have strong safety cultures, recruiting practices, training programs, and a low rate of turnover among drivers. Conversely, if companies are expecting to have more than one "bad" year out of the next five, then they would likely want to stay away from the captive arrangement.

Being part of a captive involves working together with your other members, and getting to know how they operate. Because the rates depend on a collective performance, low performing companies are really not an option, otherwise everyone suffers. When joining a captive, companies should look at who the other members are first and gather information on being a member. Bernatchez suggest that "prospective members should ask, 'do you think you really have a voice in how this captive is managed? Do you think that this program helps your risk management?'"

As Rea and Bernatchez discuss hiring and retention practices, Bernatchez notes that the turnover he is referring to is company-specific, not industry-specific (new drivers). "There's a correlation between turnover and accident frequency - the lower the turnover, the lower the accident frequency is, so finding the right fit and training those drivers, and treating them so that they want to stay are all part of an effective risk management program" he notes.

Scott moves the conversation towards current events, specifically dealing with COVID-19 and the loss of business and driving hours that may come with it. Bernatchez explains that underwriters are often reasonable people, and willing to work with your company to make adjustments. If mileage is down, exposure to accidents is down as well, so it is worth the effort to lower your premiums.

For final advice on a company considering an insurance captive, Bernatchez emphasizes that you should really understand how captives work, the risks, and financial responsibilities. You should also run your numbers and see what you would be paying in a new setting versus what you're currently paying.

As retention is a key factor in insurance costs and keeping accidents down, we're happy to offer our Driver Retention Kit with a wealth of helpful information on how to recruit top drivers and keep them working with you for a long time to come.