Why Captive

Businesses with employee healthcare expenses of between $12,000 and $15,000 per year are good prospects as they should save 10% plus just by moving to PCH.

What is Captive?

A Captive is a privately held insurance company established primarily to insure the risks of its affiliates. Captives allow a company’s risk to be judged on its own merit rather than being charged a premium based on the risk of its entire block of business. Captive can often provide claims handling services that can be substantially better than the service provided by commercial insurers. The owners control day-to-day operations. These operations include but are not limited to underwriting, claims decisions, and investment policy of the Captive.

Why Physicians Collaborative Health Captive?

Companies utilize captives to assert greater Control over their risk exposure. This Control generates many benefits that make a captive insurance company advantageous. Physicians Collaborative Health Captive was established to address the rising cost in health insurance markets, reward good risk with lower rates, stabilize renewals and provide dividends based on the captive’s performance. Dividends can range from negative in bad years to 20% and higher in good years. Physician Collaborative Health can control which groups and risks they’re willing to permit to participate in the captive. This allows for improved risk management and profitability.

PCH will work with physicians and nurses to remove inefficiencies and improve patient experience over the next 5 years. 

Savings has the potential to reach 30% to 50% annually towards the end of the 5-year period.

We believe the Captive should return multiples on your investment during that time.

Advantages of a Captive

  • Coverage tailored to meet your needs.
  • Reduced operating costs.
  • Improved cash flow.
  • Increased coverage and capacity.
  • Potential investment income.
  • Direct access to wholesale reinsurance markets.
  • Funding and underwriting flexibility. (Expected, Maximum or Incurred claims payments)
  • Greater control over claims.

A Group Captive Solution for Small and Medium-Sized Groups

Each employer establishes a separate self‐funded benefit plan in a group stop-loss captive and purchases a separate medical stop‐loss policy.
There is no commingling of plan assets, nor is there joint risk‐sharing among the benefit plans of individual participating employers. Each employer maintains complete control of their benefit plan.
The captive participates only in the medical stop‐loss coverage, which is separate (not directly connected) from the benefit plan itself.

The Advantages of a Group Captive Health Plan
There are several advantages a group captive health insurance policy can provide to both business owners and their employees:

  1. Greater Control – The first edge a captive health plan gives your organization is a more considerable amount of control. Because you, the employer, are the policy owner, you may tailor your health insurance to exactly match your most common business risks. Similarly, customizing your policy can give you access to coverages that would otherwise be unavailable or too expensive to obtain in the commercial marketplace. This access allows employers to cover staff members for operations or medications that otherwise wouldn’t be possible through the traditional insurance market.
  2. Increases Stability   Another advantage a captive plan can generate increased stability in your health plan. By pooling together with other employers, even small businesses can gain economies of scale, making it possible to purchase a group plan at a discounted rate. Also, the deeper your pool of employees, the more likely your plan rates and information will remain stable. Similarly, your plan’s renewal rate is tied to your company’s history and individual claims rather than an industry benchmark; your captive program can stabilize year‐to‐year rate increases. No longer is your company at the insurance carrier’s will, which increases the stability and predictability of your health plan.
  3. Improved Transparency Through a physician-driven captive insurance program, your company can access population and plan data more efficiently and in more detail than a typical fully‐insured health plan. Think of it as you would managing any other aspect of your business; if you do not know what’s going on, how can you manage it?
    In addition, with this improved data, you can help employees who need it the most and ensure every employee receives the best care at the best price. This improved treatment can help you promote greater health among your employees.
  4. Reduced Costs One of the most significant advantages of a group health captive is its ability to reduce your health care spending.
    The first way a group health captive reduces costs is by reducing your fixed costs.
    Under a fully insured plan, the costs are 100% fixed.
    If you have low claims costs in the fully‐insured plan, the carriers keep 100% of the profit and pass on to you a substantial increase in cost on every renewal.
    In a group health captive, the administration costs maybe 35% of the total costs, and the variable 65% is made up of claim payments.
    When claims are low, savings are utilized to create rate stability and/or a dividend back to the employer.