Academy Group Captives

		WHY IS NOW A GOOD TIME TO JOIN A CAPTIVE? Since the start of the COVID-19 pandemic, healthcare utilization has dropped significantly due to American’s fear of contracting the virus. Experts feel this trend will continue well into 2021. With claims costs down, there has never been a better time to consider joining a captive where you pay based on utilization. These benefits captives include a robust suite of services and many advantages compared to traditional approaches to insuring the employee benefits risk. These advantages are certainly heightened by the current pandemic and its associated impact on our healthcare system.
		WHAT ARE THE ACADEMY GROUP CAPTIVES? The Academy Group Captives are risk pools for insurance consisting of companies and organizations with service academy graduates in key leadership positions. One captive addresses corporate property & casualty needs. One captive is for medical & pharmacy coverage.
		WHAT IS A CAPTIVE? Captives are member-owned insurance entities. These vehicles are prominent in today’s insurance marketplace and have been serving a wide variety of organizations since the late 1950’s. Many large organizations form their own single parent captive, but the bulk of captive activity involves corporations joining forces in a group captive setting which mutually benefits all involved.
		WHAT ARE THE KEY ADVANTAGES OF A MEMBER OWNED GROUP CAPTIVE? The key benefit is that you get to keep the underwriting profit and investment income associated with your premium dollars instead of your insurance company. Other benefits include: Insurance that is purchased to protect the captives from catastrophic claims can be procured more competitively because the members’ combined purchasing power is far greater than what could be procured separately. With respect to property & casualty insurance, claims management and risk control services are highly sophisticated and represent a big upgrade compared to your current program. The Benefits Captive offers state-of-the-art data warehousing and analytics, wellness programs, concierge services for high dollar claimants, and coalitions for prescription purchasing — all designed to reduce costs over the long term. Interaction with other business owners in the captive is generally reported as a terrific benefit. CEOs, COOs and CFOs involved in the program enjoy positive interaction with other members who have similar corporate responsibilities. The captives will be domiciled in the Cayman Islands, which allows surplus to accrue on a tax-deferred basis. For private companies, the Property & Casualty Group Captive can be utilized to provide attractive estate planning benefits to company ownership. Captives are generally insulated from market fluctuations as compared to direct programs with standard markets. With the Benefits Captive, certain taxes are avoided by entering the program if you were previously procuring insurance on a fully-insured basis. This results in an automatic savings of roughly 5% right out of the blocks.
		WHY IS THIS GROUP CAPTIVE PROGRAM UNIQUE COMPARED TO OTHER GROUP CAPTIVES AVAILABLE IN THE MARKETPLACE? Control of what entities are in your risk pool is the prominent driver here. In essence, all insurance carriers are risk pools at their core, but you don’t know who is in the pool with you and you have no sense of the performance of the pool. Our basic premise is simple. We believe that companies and other organizations where senior leadership team members are service academy graduates are well-run organizations. Therefore, the quality of our risk pool should be better than other insurance options.
		WHAT SHOULD WE EXPECT IN TERMS OF THE COST TO ENTER THIS PROGRAM? We think the vast majority of respondents will be at or below their current pricing. We are confident we will accomplish this for at least 90-95% of the organizations invited to participate. Keep in mind that this means the profit margin insurance carriers build into their pricing will now accrue to you in the form of surplus, creating significant savings over time.
		WHO HAS BEEN INVITED TO PARTICIPATE? Companies with service academy graduates in key management positions have been invited to participate in this unique opportunity. Leadership roles include CEO, COO and CFO along with other management roles. The Academy Group Captives are heterogeneous group captives meaning they serve companies from varying industry sectors.
		IS THERE ANY GEOGRAPHIC LIMITATION TO THE CAPTIVE IN TERMS OF PARTICIPANTS AND WHERE THE COMPANIES ARE LOCATED? The only limitation is that the companies must be domiciled in the United States — meaning they are U.S. based companies. Some organizations have facilities, personnel or operations in countries outside of the United States.
		ARE THERE ANY CAPITALIZATION COSTS ASSOCIATED WITH THESE CAPTIVES? Yes. All group captives require a one-time capitalization cost per member entity. The cost will be determined when the budget is finalized based on actual participation, but it is expected to be approximately $25,000 per company for each captive.
		WHAT COVERAGES ARE INCLUDED IN THE PROPERTY & CASUALTY CAPTIVE? A group captive addresses casualty coverages such as Workers’ Compensation, Automobile Liability and Commercial General Liability.
		WHAT ABOUT OTHER POLICIES LIKE PROPERTY, DIRECTORS & OFFICERS, UMBRELLA OR EMPLOYMENT PRACTICES? The captive organization provides these coverages by optimizing the market clout of our insureds. These policies are group marketed to ensure we develop the lowest possible rate structure and provide the broadest possible policy terms and conditions. The carriers then issue individual policies to Academy Group Captive member entities. Members take advantage of being in the group from the standpoint of driving market interest, while simultaneously receiving the personal touch of individual policies where you are not sharing risk with others. You get the best of both worlds. The following lines of coverage are included in the program: Commercial Property Management Liability Directors & Officers Employment Practices Fiduciary Liability Commercial Crime Kidnap & Ransom Cyber Liability Pollution Liability Surety Bonding Employed Lawyers Umbrella/Excess Liability Professional Liability
		WHAT COVERAGES ARE INCLUDED IN THE BENEFITS GROUP CAPTIVE? The Benefits Group Captive includes coverage for Medical and Pharmacy costs. Other benefit related coverages such as Life Insurance, Short Term and Long Term Disability, Dental, Vision and other Voluntary Benefits will be offered on a group marketed basis to provide cost effective programs for our member entities.
		WHAT ARE SOME OTHER BENEFITS OF PARTICIPATING IN THIS GROUP? There are a number of other benefits to this program that transcend insurance procurement and risk management support. Some of our thoughts are as follows: Inherent Trust Among the Membership: This unique opportunity creates a forum of service academy graduates who have experienced significant success in business. With respect to this, many of us are looking for ways to make incremental improvements in our organizations. During our periodic board meetings we intend to run workshops focused on other common business issues to allow members to trade notes with other leaders they would naturally respect and trust. Include a Military Focus at our Board Meetings: Since we all have a common background, we suspect there is mutual interest in trends and developments both at the service academies and out in the field or fleet. We intend to include standout military speakers to keep us abreast of issues affecting the armed forces. Captives Allow Small to Mid-Sized Companies to Present a Large Company Profile to the Marketplace: The reality is that larger companies get access to top notch resources at lower cost; our captive programs will help you enjoy this same benefit. This theory applies to items like Stop Loss Insurance in the Benefits Captive or Reinsurance for the Property & Casualty captive. State-of-the- art services can also be procured to provide assistance in claims management or loss prevention (P&C) or wellness, data warehousing, analytics and pricing transparency (Benefits). Joining together as a group to procure these two insurances helps your organization to optimize the cost associated with these key expense items. Further, it gives you the best tools available to keep costs at their lowest possible level over the long term. Captives Naturally Create More Focus on Insurance Costs and this Translates to Greater Top Down Leadership in this Area: When organizations join a Group Captive, they naturally become more focused on the success of their insurance programs. Becoming an owner in the captive and understanding that good performance can accrue financial benefits to your organization, tends to increase the commitment of management and therefore the success of these programs. We have experienced this phenomena many times over the years. The Academy Group Captives Allow You to Take Control of Your Risk Pool: As we mentioned earlier, this aspect of the programs cannot be overstated. All insurance is risk pooling at its core. Your company is part of a risk pool with Travelers, Hartford or Cigna right now. The difference is that you have no control of that pool, who is participating in it, and what kind of loss ratios it produces. The better the risk pool, the better the results. Opportunity to Give Back to Our Military Families: We expect great success with these group captives, similar to the success we have experienced with many other pooled risk programs we oversee. Upon the success of these captives, we could agree to carve out some small percentage of our surplus or profits to give back to families of the fallen or other tremendous charities that serve our veterans. Again, this is just something to consider with this insurance approach. One way to view this is that monies which were historically flowing to the bottom line of large insurers will now go towards some worthy cause of our collective choosing. Concept is Similar to USAA: In many ways, what we are proposing is very similar to USAA — one of the most successful insurance companies in the country. USAA is simply a risk pool with participation limited to military veterans. The concept is simple, USAA is betting that a pool of veterans will perform better actuarially then a pool made up of random U.S.citizens. That bet has paid off many times over. The Academy Group Captives are betting that property & casualty and benefits pools made up of companies managed by service academy graduates will perform better than a random pool of companies. We are highly confident that this bet will pay off for everyone involved.