Construction: Captive Insurance Companies Present Opportunities for Contractors to Mitigate Risks, Generate Savings
10/21/2011
In times of tight bidding and shrinking margins, contractors continually search for ways to control costs and improve their bottom line. While some costs, such as labor, are within a contractor’s control, other costs are largely an uncontrollable function of the market. Insurance is one such cost. Like commodities pricing, contractors often believe that they have little influence over insurance pricing, and know that when they pay an insurance premium they are not only paying for the cost of coverage, but also the insurance company’s overhead and profit.
To counter this, construction firms, particularly in the heavy/civil segment, have begun exploring the use of captive insurance companies, which have been established to provide insurance coverage to a parent company or to a group of companies, in order to reduce and stabilize their insurance premiums as part of an overall, comprehensive risk management strategy.
Click here
to read “Captive Insurance Companies Present Opportunities for Contractors to Mitigate Risk, Generate Savings,” which touches on such points as:
- Types of insurance captives;
- Reasons for establishing a captive; and
- Hurdles to establishing a captive.
Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.