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Gillis, Ellis & Baker provides property and casualty insurance services for a wide array of commercial clients, with programs from simple business policies for retail outlets to complex self insurance for a wide range of exposures. Our partnership with Assurex International allows us to accommodate clients’ needs domestically and abroad. We look forward to scheduling a consultation to discuss your needs and answer any questions you may have.

Gillis, Ellis & Baker’s proficiency in business insurance lends itself naturally to proficient handling of the needs of owners. Our approach to personal insurance combines attention to detail with thorough accommodation of the complex requirements intrinsic to large personal accounts.

BENEFITS

Gillis Ellis & Baker, Inc. and Assurex Global have formed Assurex Global Reinsurance , a Bermuda-based captive insurer.


What is a captive insurance company?
That question is best answered by first defining a traditional insurance company:  a mechanism whereby the risk of loss to the few are shared by many.  Everyone pays in a premium, and the insurance company hopes there is enough premium paid in to pay the claims that are presented.  A captive insurance company, referred to simply as a “captive,” is an insurance company owned by one or more entities, usually formed for the purpose of insuring only their own risks.  Because participation in a captive is allowed only by other members, the owners of the pcaptive are able to limit the participation in the captive to companies that operate in a safe manner.



What makes a captive different from a regular insurance company?
Unlike buying insurance from a traditional insurer, participants in a captive are able to restrict participation to only the safest operators in their class.  All participants in the captive usually have good loss records, so the loss ratio of the entire captive should be lower than for a traditional insurer.



Who can participate in the Assurex Global Re Captive?
Almost any industry can participate in the Assurex Global Re Captive.  This is a heterogeneous captive, so the membership will not be from the same industry.



What are the characteristics of a good candidate for a captive?
First, they have to be fairly large, paying in excess of $250,000 for general liability, automobile, and workers compensation insurance. Second, they have to have predictable high-frequency, low-severity claims.  An organization that has a dozen claims under $5,000 each in the course of a year and an occasional severe claim would be a good candidate.  Third, they have to be committed to risk management.  The firm will usually have a full time risk manager on staff or will allow us to provide that service. Fourth, they can not be looking for a quick fix.  This is a long-term solution and requires a commitment of several years.



How are rates determined?
The Assurex Global Re captive will develop its rates based on the customer’s loss record, not some table in a manual that says what should be charged for a certain industry.  Since only the good operators are allowed in, their loss histories would suggest lower rates than those charged for an entire industry.



What are the rewards of being in the Assurex Global Captive?
Because of the way rates are determined, there may be significant financial rewards.  Traditional insurers really take all comers.  Certainly, some underwriters are more conservative than others, but they are writing thousands of companies and are not able to give each of them the in depth review that the captive allows.  Also, the captive has a much lower cost structure.  No buildings to pay for, large bureaucracy to support, or any of the other costs associated with running a major insurance company with thousands of employees. Beyond the initial premium, the participant will also be eligible for dividends that could be as much as 60% of the premium, if the participant’s losses and the losses for the group are better than expected.



What are the downsides of the Assurex Global Captive?
If the participant’s losses are worse than expected, the member may have to pay an additional premium, similar to what might be involved in a high-deductible plan or a self-insured program. The final cost will be determined by how the participants’ actual losses relate to the predicted frequency and severity of claims.



Can one member do well while another does poorly?
Absolutely.  While every effort is made to cherry pick the buyers of insurance and only have the cream of the crop participate, insurance is there to pay claims.  A bad year for one or two members should not ruin the program for the other participants.



Does it cost the participant anything to participate?
A capital contribution of approximately $30,000 will be required. If a company thinks it is qualified to participate, what are the steps to join the Assurex Global Captive?  We would need to review the financial statements for the company, along with insurance information from the past five years, including losses, premiums, and activity levels.  Additionally, we would need to determine if the company is serious about risk management and loss control and is ready for a long-term commitment to an alternative risk transfer program.



How long does the process take?
Once all of the information has been put together, an underwriting decision can usually be made within a month, or so. 



How do we get started?
Contact your GEB representative or Anderson Baker.