The interest in using captives for employee benefits is increasing, according to the 13th Annual Captive Insurance Market Study, which was released during the annual conference of the Captive Insurance Cos. Association in March.
That doesn't mean it will be easy for risk managers to facilitate the change, said Michael Anderson, director, Hazard & Insurance, Xcel Energy Inc. in Minneapolis, who was part of a panel discussion on the survey results during the conference.
"It's a troubling area to get into, at least it was for us," he said, noting that he tried for five or six years to interest human resource professionals at his organization in using a captive for employee benefits.
"All we wanted them to do was visit with us and seriously look at taking some of these benefits in the captive and they would run from the room screaming," he said.
That changed when the C-suite became interested in the financial advantages of using the captive, and now Xcel has paid $50 million in premium for post-retirement medical benefits in its captive, he said.
"The issue is to get the HR people willing to look at it and sometimes it does take some higher levels to make that happen," Anderson said.
According to the survey, about three in 20 (15 percent) captives said they may possibly write stop loss employee benefit insurance in the next three years, along with 10 percent that are likely to write it within that time frame, and 8 percent that already do.
In addition, 16 percent may add disability insurance to their captive in the next three years, along with 6 percent that are likely to add it in three years, and another 6 percent that already write it.
Accident and health insurance was also a possibility in three years for 16 percent of the captives polled. Four percent said such insurance was likely to be part of their captive in three years and 8 percent already write it, according to the survey.
--By Anne Freedman
May 1, 2013
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