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I'm working with the owner of several restaurants in our area. He has had a low loss ratio for the last 5 years and is tired of paying high WC premiums(??). Of course, a friend of his told him that he should try to form a captive type WC plan with several other restaurants in the area that are of the same brand.

Does anyone have a good source for info on captives?
Do you have one, is it good, bad or not sure?


Any help would be great!

The issue of captives is a tough one and to be honest it can be a lot of work with little or no reward if it fails.

I would not suggest a captive for WC due to excessive fronting costs and the restaurant industry is not "ideal" for captives also due to the turnover and lower income of the employees.

Thanks for the info...what if we grouped about 50 or so like restaurants together, then wouldn't it be worth it?


Thanks in advance for any and all info or comments!!!!

IinusreU,

Setting up a captive can be a good idea. Having 50 accounts to start with is good. There are some other things that you will need, however, such as:

1. What are the loss ratios on these accounts?
2. What state(s) are the restaurants in? Depending on the state, you may be able to setup a captive without fronting fees.
3. Are the restaurants going to be in it for the long haul?
4. Would the restaurants be willing to make capital contributions to the captive?

I have worked with some workers comp captives/self-insurance trust funds that are specifically for restaurants? With the proper management, a captive is something that can work.

I hope this helps.

Norm

You might want to browse captiveguru.com. Connected with USA Risk, a independent captive mgmt firm (not affiliated with any broker). By contacting them, you may be able to determine if your clients fit the usual profile for successful captive strategy.

Gunn-Mowery from Pennsylvania has a heterogeneous captive for firms in low to mid hazard industries, paying $100K or more in WC/GL/Auto with low losses and strong financials. There are others similar that might be a fit for your restaurant group.