Insurance Coverage

We offer consultation and advice regarding insurance coverage matters ranging from a comprehensive analysis of your risk management program to responding and evaluating denials of claims by insurers, failure to reimburse costs, failure to settle, and Cumis counsel issues. We have a wide range of experience in all types of coverage programs including construction, professional liability, business interruption and first party claims, employment practices and general liability.

Captive Insurance

LOBB CLIFF & LESTER, LLP firmly believes that captive insurance companies are a great planning tool for business owners, large and small; all business planners should consider the benefit of a captive when advising their business clients on insurance matters, as well as potential tax and wealth transfer advantages.

Captive insurance is a form of self-insurance whereby a business owner forms an insurance company to insure some or all of the risk of the operating businesses.

Captives originated in the 1930s and although they initially only served highly specialized companies, today they benefit a variety of businesses in many different industries.

Captives have grown in popularity over the years. While there were only 1,000 captives in 1980 there are now approximately 5,000. Captives are currently responsible for 10% of the commercial insurance premiums collected worldwide. The U.S. dominates the captive market; 30% of all captives are domiciled in the U.S.

Why would a business owner want to form a captive insurance company?

Reduced Insurance Costs:

By using a captive businesses are able to maintain level insurance premiums equal to their loss experience regardless of industry fluctuations. Additionally, insurance costs can be reduced by 30% by decreasing exposure to the industry risk of loss.

Coverage Availability:

A captive insurance company can keep a company in business if an industry crises results in insurance carriers pulling out of certain lines of coverage leaving the insured with no other insurance options.

Tax Benefits :

Insurance companies are allocated certain tax advantages not available to other types of businesses and if structured correctly can be of significant value to the business owner.

Claims Handling Control and Data Collection:

Historically, an insured has relied on the insurer to keep a database of their claims activity and to follow-up and challenge claims made against their company. Decisions by the insurer regarding defense or settlement of claims are typically in the control of the carriers. Often times, as in California's recent workers compensation crisis, insurance carriers have simply paid the claim and passed the cost onto the insured.

Negotiation Tool:

Once established, the captive can be a very powerful negotiating tool when discussing insurance with the commercial market. Owning an insurance company allows the business owner to quickly place a policy if the company is being overcharged in the commercial market or being stalled on a quote for an insurance policy with a quickly approaching lapse date. In addition, a business owner can integrate the captive into different insurance layers and reduce costs by eliminating the commercial market.

Access to the Reinsurance Market:

The captive gives the insured access to the wholesale reinsurance market allowing the insured to purchase insurance at more affordable rates.

Who Is Eligable To Form a Captive?

Any business can form and structure a captive as long as it has the adequate capital and better than average claims histories as well as the resources, time and personnel to work within the guidelines of the captive insurance rules.

If you are interested in learning more about captive insurance companies and how they can benefit your business, please give our insurance attorney a call to determine if this is the right option for your business.

Attorneys providing legal services for clients throughout southern California, including, but not limited to the cities of Riverside, Los Angeles, San Bernardino, Anaheim, Pasadena, Long Beach, Santa Ana and San Diego.