Workers' Compensation: For many business owners these two words describe one of their biggest headaches as well as one of their largest expenses in running their business. To make matters worse, there is usually no financial alternative for the small or mid-size employer as rates are set by an insurance company and/or governmental agency. Large corporations, including the fortune 500, have long been able to utilize an alternative insurance facility known as a ‘captive company’ to manage their workers compensation expenditures and realize significant savings.

The ‘captive’ is an insurance company established by the employer for the sole purpose of insuring his organization. The company pays premium to the captive, any money remaining after claims have been paid is returned back to the company or can be retained as surplus in the captive. Conventional insurance companies keep all profits made on premiums for the benefit of their stock holders and corporate structure while with a captive the profits are kept in-house. Captives have grown since the tragedy of 9/11 at record rates, with estimated combined assets of the almost 5000 operating captives exceeding 50 billion while insuring hundreds of billions in risk exposure. This represents nearly half of the United States insurance markets.

The start up costs for a captive insurance company are significant and are met fiscally only by the larger corporations. Premiums must be pre-funded to make sure there is enough colateral on hand to handle claims. Claims mangement personnel must be available and audited financial reports are a necessity. Both these factors incur significant additional expense. Yet once established, the captive can return savings to the primary corporation of up to 50%, making the advantage of the captive over the long-term, particularly for those organizations that make a concerted effort to improve safety. Wouldn’t it be a reief if every company had access to such a program, regardless of size?

Now these same cost savings can be available to your organization regardless of its size. Your company can participate alongside a group of safety conscious members of the American Consolidated Business Owners Alliance (ACBOA; Washington, DC), if certain pre-qualification requirements are met. ACBOA has developed the infrastructure for a captive allowing business owners to take advantage of the benefits of a captive insurance operation by spreading the exposure among the entire membership. Profits generated by the program will be shared with members that have favorable claims experience.

ACBOA has secured the participation of Wells Fargo Bank, Ullico Insurance Company, Ramsgate Insurance Services Company (RISC), A+ rated reinsurance companies, a highly professional claims team with exceptional exceptional safety consultants. All these encompass the ACBOA sponsored profit sharing workers' compensation program reserved exclusively for qualified members. While single member captive companies could require over a million to establish, the sponsorship of the ACBOA has limited the investment for their members to 25% of the member’s annual premium. These investment funds are invested only in government secured notes and are and are subjective to control and review by the ACBOA selection committee, captive board, participating insurance companies, captive regulator authority, captive management company and program administrator.

The investment trust, Preferred Commercial, LLC is controlled by the ACBOA members. Its purpose is to provide an extra layer of self-insured protection beyond the insurance company’s claims fund up to its excess insurance stop loss policy referred to as the GAP. At that point reinsurance company excess insurance attachment occurs. In effect, the members are sharing in the insurance program’s losses up to a maximum of 25% of the members annual premium. Your deposit is your investment. In exchange for this risk, the members with favorable claims experience will have the opportunity to share in the insurance programs profits and could experience a return on their investment for many years, as long as the program is profitable.

In the event of an adverse year of losses in wich funds are taken from the investment trust to pay claims, members will be asked to replenish the funds (not to exceed 25% of members annual paid premiums) in order to renew their membership and assure 25% of their annual premium remains in the trust. The members have the option to decline any request to replenish the claims fund simply by non-renewing their policy. As with all investments, there is no guarantee of a large financial return, but even if a member experienced poor results, this program provides a level of control over their workers' compensation program that does not exist in standard markets. ACBOA members have the profit sharing advantages of captive ownership without bearing the full cost of development. This program is not assessable, and the option to participate is at the sole discretion of the business owner.

The ACBOA Profit Sharing Workers' Compensation program is designed exclusively for the safety conscious employer with an above average safety record. To qualify members must meet the underwriting requirement established by the insurance company and the criteria of the ACBOA selection committee. Financials may be requested. Most members have historically maintained a safe work environment and have produced favorable claims experience four out of the last five years.

The logic of selecting successful business membership partners in a preferred insurance program increases the probability of higher underwriting profits available for membership distributions. If members manage Workers' Compensation losses, the potential for consistent long-term profit sharing is made possible. Now, small business owners can take advantage of earning underwriting profits that normally are reserved for the insurance company.

Think your company qualifies? Take advantage of this exclusive offer made possible through the ACBOA Workers' Compensation Program and open up the possibility of adding thousands to your bottom line and much more!