ORLANDO, Florida – Risk managers can use captives to negotiate down prospective commercial insurance rate hikes, even if they don’t end up using the captives to cover the risks, several captive owners said.
They were speaking during a session Thursday at the World Captive Forum in Orlando, which is sponsored by Business Insurance.
Massachusetts Life Insurance Co. faced a tough property renewal two years ago, said John O’Neil, lead insurance counsel at the Springfield, Massachusetts-based company’s captive.
“We had not had a lot of claims … but some of the top layer property carriers really wanted a lot of premium,” he said.
The company decided to run the top layers of the property program through its captive but two days before the renewal the insurers returned with an offer of a significantly lower premium for the coverage, Mr. O’Neil said.
“We had walked away from it already, at least mentally and emotionally. It was almost like walking out of the car dealership thinking ‘I’m never going to own that car’ and then three days later the dealership calls you back saying, ‘Do you still want it because we can come to you a little bit,’”…
