Sharing risk and reward
Sharing risk and reward

Questions you might
be asking?

Will my usual insurance coverage cost the same?

Your risks are priced at a standard market rate. So, participating in RE–PAID shouldn’t mean that your insurance costs more.

We underwrite each client individually to make sure that we understand your business, rate your policies correctly, and give you the credit that you deserve for your risk management program.

This care and attention to detail results in pricing stability, both now and in the future.

Will I get standard insurance policies?

Yes. You’ll get A rated admitted and/or excess and surplus lines policies.

We’ll work with your broker who will ensure that the policies you get through RE–PAID give you the coverage you need.

What if I need insurance limits beyond what’s available with RE–PAID?

Your broker will help you obtain any coverage you need for limits in excess of RE–PAID policies. The excess policies will be underwritten and purchased from the general insurance market, just as they are today.

Does my policy still have a deductible?

Yes. The risk you will take will sit above any deductible.

Do I need a broker?

Yes. Your broker will advise you on coverage, and gather the underwriting information needed to get you a quote.

Where is my money?

I–RE retains your premiums on a funds withheld basis in a premium trust account. Your premiums are used to pay your claims.
Any cash collateral you put up resides in trust accounts with Pinnacle Bank and Morgan Stanley.

These accounts do not pay interest.

What are the costs involved in owning a captive?

If you don’t have a captive already, your captive manager may charge a one-time fee to have the captive formed and licensed. This is in addition to the insurance premium you pay.

Annual expenses to run your captive are deducted from the premium paid to your captive. Although actual costs vary by captive manager, as a benchmark, total formation fees and annual operating expenses are typically about $40k each.

You may also need to put up capital. The amount of capital you need (if any) depends on the manager and regulator you choose for your captive. It’s important to choose the location of your captive as this regulatory requirement can vary.

I’m not an insurance expert, how do I manage my own claims?

Claims managers and lawyers manage your claims, from first notification through to settlement. They combine market expertise with analytics and technology tools to deliver precise, controlled, and measurable results.

Subject to approval, you can also appoint your own preferred specialist attorneys.

How much of my claims do I pay?

Your insurance policy responds to all claims, above any deductible, up to the limits you buy.

Behind the scenes, you’ll pay the claim, but only up to limits you choose. 30% of each claim is paid by I–RE’s central fund. The balance, up to the limits of your insurance policy, is paid by A rated insurers.

You choose the limits you want, typically:

Limits Per claim In total
Option 1 $250k $1m
Option 2 $350k $1.4m
Option 3 $250k $2m

What happens if I make a loss?

Underwriting risk in a captive involves exposure to the risk of loss, as well as the opportunity for underwriting profit.

Your premiums are used to pay your claims. If they are insufficient, your collateral is at risk, and it’s possible additional collateral or capital may be required.

How does my captive make a profit?

Your captive then pays for its share of your claims, and its operating expenses, out of the premiums it gets back.

If premiums are more than claims and expenses, the difference is your profit.

You can also work with your investment manager to earn investment returns
on the profit your captive retains.

When is profit paid?

Your insurance starts during an underwriting year. For property and general liability that runs from April 1, and for workers’ compensation and auto it runs from November 1.

RE–PAID underwriting profit is calculated at 18 months, 3 and 5 years following the end of each underwriting year. It’s then paid to your captive within 90 days.

Can I do other things with my captive?

Yes. Your captive manager will guide you through the process for underwriting any additional coverages outside of RE–PAID, into your captive to better protect your business.

How do I get my money out?

For new captives, clients often let their profits accumulate for the first three years or so. Ultimately, the decision on when you request a profit distribution, in the form of a dividend, is up to you.

Should you wish to take a profit distribution, you’ll simply have your captive manager make a formal request of your regulator. Although timing may vary, regulators are typically able to complete their review of these requests in just a few weeks.

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