The Captivating Case for AED Captive Health Insurance Plan
32 Construction Equipment Distribution www.cedmag.com November 2009 Insurance Editor's Note: Many dealers already use captive insurance programs in the form of workman's comp plans besides answering our questions about how a captive program works on the health insurance side, it merits noting that Veritas sources also pointed out that the federal health care reform package, regardless of what form it takes, should not deter employers from proactively shifting to a long-term, cost-cutting captive arrangement. Explain the health insur-ance captive you're putting together for AED members and how it differs from current health insurance plans. Joe Zamzow: The AED Health Insurance Captive provides member companies the opportunity to reduce costs associated with health insurance, while creating stability, increased profits, and healthier employees. This is done by allowing AED member companies to work together and create their own insurance company. Annual savings under the captive should be 5 to 15 percent depending on the claims for the participants in the captive. These savings are achieved by retaining carrier profits, removing state mandated benefits that are rarely or never used, and by implementing a disease manage-ment program that will improve the health of the employee population. Most AED members are currently under a fully insured plan. With a fully insured plan most employers have significant rate increases every year, little to no meaningful infor-mation, limited plan options, and minimal options for controlling costs. For self-funded employers, they can expect lower administrative costs, the ability to recoup a portion of stop loss premium, less volatility, and better loss control. What drives the savings to a dealer's bottom line? Bob Walsh: The biggest advantage of the captive arrangement is that the participant in the captive will retain profits normally kept by the carrier. Let's be honest, if you pay insur-ance companies $100,000 a year, for worker comp as an example, and you don't have a claim, you don't get money back. They pat you on the back and say, Great year! Let's hope you have another great year next year. Granted, I understand, they're taking the risk, I know how it works; but if you take this captive on the health insurance side, you can quickly realize the potential for serious savings: A company that spends $1 The Captivating Case for an AED Captive Health Insurance Plan A Q&A conversation with Veritas Risk Services executives Bob Walsh, executive vice president and partner, and Joe Zamzow, account executive, to explore the Veritas Insurance Captive for Equipment Dealers, which they're rolling out for AED members. By Kim Phelan