Insurance is something which cannot be avoided in any sense of the word. Whether it is required by law, as in the case of vehicles, basic common sense (as in Home Insurance) or just good business sense; you will need some type of insurance for almost every aspect of your life. The same goes for you business, especially in the volatile market and the increasing demand for every successful project to first start off as a substantial risk, the fact is that you will need comprehensive insurance for many business ventures that you may start. Many people who are new to starting up a business choose to turn to an insurance or captive consulting firm to assess their insurance needs.
How do you know whether you need insurance or not? First of all, whether you know it or not, you are already self-insured. In any business there is a certain amount of risk, and being self-insured means that you are taking on new ventures with nothing to back you up but your company assets. This is the means by which many companies operated in the past, and although it worked well back then, the market is a little too uncertain to be able to self insure your every venture. Ironically, most people would blame the current economic crises on unwise insuring, which is what caused the collapse of some of the largest banks and insurance firms.
However, in order to choose whether to insure a new business move or not, you will have to individually assess it based upon its likelihood of failure and the cost of insurance. Captive insurance is a type of indemnity, which has many advantages over typical insurance, with many companies hiring captive consulting agents on a regular basis to adjudge the risk of a new project. The difference between captive insurance and normal insurance is that, typically, captive insurance is owned by the company. This would not be much different than simply using the investment money as surety to fall back on in case of a failure, except for two key reasons.
The first one is that captive insurance groups are usually formed by parent companies for several or more unique companies; which spreads the entire risk and allows it to bail out failed ventures without losing the 40 cents lost on every dollar spent on insurance. The second reason is that this scheme allows the money to be paid back to the company in a very tax friendly manner.
Captive consulting firms take it upon themselves to equip large companies with what they need to start their own captive insurance company, including administration, management and legal issues. Starting this up by yourself is a complex issue, as there are many legalities involved. It makes better sense, considering the value of your own time, to hire a captive consulting company to create your own insurance without having to hassle over mountains of paperwork.
How do you know whether you need insurance or not? First of all, whether you know it or not, you are already self-insured. In any business there is a certain amount of risk, and being self-insured means that you are taking on new ventures with nothing to back you up but your company assets. This is the means by which many companies operated in the past, and although it worked well back then, the market is a little too uncertain to be able to self insure your every venture. Ironically, most people would blame the current economic crises on unwise insuring, which is what caused the collapse of some of the largest banks and insurance firms.
However, in order to choose whether to insure a new business move or not, you will have to individually assess it based upon its likelihood of failure and the cost of insurance. Captive insurance is a type of indemnity, which has many advantages over typical insurance, with many companies hiring captive consulting agents on a regular basis to adjudge the risk of a new project. The difference between captive insurance and normal insurance is that, typically, captive insurance is owned by the company. This would not be much different than simply using the investment money as surety to fall back on in case of a failure, except for two key reasons.
The first one is that captive insurance groups are usually formed by parent companies for several or more unique companies; which spreads the entire risk and allows it to bail out failed ventures without losing the 40 cents lost on every dollar spent on insurance. The second reason is that this scheme allows the money to be paid back to the company in a very tax friendly manner.
Captive consulting firms take it upon themselves to equip large companies with what they need to start their own captive insurance company, including administration, management and legal issues. Starting this up by yourself is a complex issue, as there are many legalities involved. It makes better sense, considering the value of your own time, to hire a captive consulting company to create your own insurance without having to hassle over mountains of paperwork.