The insurance industry provides stability to employers by pooling large amounts of diversified premiums. Insurance companies make a profit by charging more in premiums than they pay out in losses. Insurance companies also make significant income by investing premiums until the funds are necessary to pay losses.
A group captive seeks to pool a number of like minded employers in an effort to create a more sizeable, and therefore predictable, volume of premium. By achieving this critical mass, each member of the group captive can receive the benefits normally reserved for large employers.
The risk management techniques of risk transfer, risk sharing and risk retention are tied to the predictability that comes from the law of large numbers. Depending on the “predictability” of certain exposures and the premium base, these different techniques can be implemented to reduce the cost of insurance.
Garnet Captive designs group captives incorporating a “retain, share, transfer”™ strategy on losses. Each employer retains its predictable losses (“retain”); the group shares losses that are unpredictable for a single employer, but predictable for the group (“share”); and the group transfers unpredictable losses to the insurance carrier (“transfer”).
Garnet Captive manages several existing group captive programs. Garnet Captive’s current programs are either open to new brokers; or accessed by employers through a limited broker network. Additionally, Garnet Captive can customize a new captive program for a group of homogenous employers or for employers with a common tie.