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Sometimes companies create what are called captive agencies to cover themselves. They do this to get comprehensive insurance for uncommon risks that may be expensive to insure or for which coverage may not even exist. However, if you are interested in customized coverage but cannot afford to start your own captive agency, industry experts suggest exploring the advantages that rent-a-captive offers.
Basics of Renting Insurance
Starting a captive agency is time-consuming and requires careful logistical and financial planning. Hiring knowledgeable staff to manage it is also expensive. If you do not have the resources to undertake to start your own captive agency, you can benefit from services provided by one that is already operating smoothly.
With rent-a-captive arrangements, a captive offers its services to outside organizations and businesses for a fee. Captives can provide underwriting, financial consulting, reinsurance, and accounting expertise.
This type of insurer checks the financial security of potential new clients and performs risk assessment before providing coverage. In addition to avoiding potential loss from high risks and earning a minimal annual fee, rent-a-captives also hope to get profits from underwriting work. This specialized type of insurance provider is one of the most popular areas within the captive niche.
A good first step to forming a captive agency is renting services from an established captive. With this arrangement, you benefit from professional expertise while organizing your resources to eventually set up your own.More