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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

A FREE 12-page special report from Captive.com

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Risk Considerations for Captive Financing of Group Life and Disability

Disability Insurance
April 24, 2015

“Group life and long term disability (LTD) insurance are among the most common U.S. employee benefit programs funded through captives,” according to a recent Milliman publication. Many of the risks associated with these types of benefit programs are different from captive property and liability coverages.

The February 2015 issue of Milliman’s “Benefits Perspectives” provides an excellent overview of the more significant risks that should be considered for funding these programs in a captive. Milliman Actuary Paul Correia, FSA, describes in detail the key risk considerations associated with group life and LTD insurance programs. The risk considerations include:

  • Risk diversification

  • Counterparty risk

  • Catastrophic risk

  • Incident risk

  • Interest rate risk

  • Asset default/reinvestment risk

  • Social Security risk

  • Health Insurance Portability and Accountability Act risk

If you decide to fund these risks through a captive, there is some good news. Milliman reported that its 2014 survey found that “seven out of nine major group life and/or disability insurance writers were active in captive markets for either group life or LTD (long term disability) or both.”

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