A Captive is a self-funded solution where a collection of employers come together to form their own insurance pool. They share some of the risk among their fellow participants and purchase stop loss coverage for catastrophic events. As a larger entity greater leverage can be gained with insurance carriers resulting in lower administrative fees and stop loss rates. By joining a captive an employer can enjoy the benefits of self-funding yet have their individual risk mitigated by sharing with fellow participants.

Captives have become increasingly popular as a solution for small to mid-sized employers who wish to gain the advantage of self-funding yet feel the risk is too great to self-fund as a standalone entity.

The RiskVantage Algorithm can be a key component to manage a captive insurance pool. Ultimately, the captive will bear the collective risk contained in their pool. The captive needs to compete with the other options that employers have at their disposal for health benefits. For a captive that wishes to grow to enhance their scale advantage and be viable long term, it needs to be highly selective in choosing which prospective entrants can join.

The captives that successfully manage the selection of their risk pool can keep costs low and attract additional participants. The algorithm can be utilized to evaluate potential new entrants to select only those that have a favorable risk profile. Some captives make attempts to be selective in choosing new entrants. However, they use antiquated methods such as a cursory review of industry, demographics and past year claims experience when available. Unfortunately, these approaches may provide a false sense of security as ultimately this data collectively provides a poor indicator of what to expect for future claim costs.

RiskVantage will allow a captive the ability to manage their risk profile in a systematic way to develop the best possible risk pool leading to favorable premium rates with stop loss carriers and dividends to return to participants resulting from favorable claims experience.

For existing captives, the RiskVantage Algorithm will assist in making pricing decisions for the individual participants in the captive. The algorithm can be utilized to establish methodologies to successfully stratify pricing within the captive. This pricing needs to be based on a fact driven process that provides a stable, sustainable result over time. Simply basing pricing on past year claims history will lead to instability and dissatisfaction. It is not in anyone’s best interest to see the pricing of an individual employer could vary wildly from year to year based on the claims of one or two employees.

RiskVantage can help the Captive survive long term. The algorithm can help price individual participants in a stable manner. The output from the Algorithm will also identify any weaknesses that a participant might have and suggest changes to their plan administration that will mitigate risk. This proactive approach to managing the pool will prevent some high dollar events keeping costs low.

RiskVantage is available to contract with a Captive to utilize the RiskVantage algorithm on a project basis to review the current state of the captive or to evaluate a potential new prospects for entry. RiskVantage is also willing to develop an exclusive arrangement with a Captive in a given geographic area. This will provide a competitive advantage for the captive as competing captives will struggle to remain competitive as they fail to manage their own risk and begin to see their price escalate.

Other Services:
The RiskVantage team also has extensive experience in these areas to help Captives manage their plan:
• Developing plan designs to drive optimal member behavior
• Developing plan designs that promote the use of efficient networks
• Identification of ideal partner vendors such as wellness providers
• Evaluation of plan administrator and stop loss carrier financial proposals
• Evaluation of plan administrator performance in terms of network discounts, population health management, utilization management, and claims payment accuracy.
• Regulatory reporting
• Go to Market assessment, strategy and execution to form a new captive