Question
Hi guys,
Wondering if anyone has some information on how to found your own insurance company.
I read that UPS owns their own 'captive' insurance company, --they pull $$$$ from one pocket and put it in the other, now that's SMART!
THX & GOD BLESS
Answer
When your worth the money UPS is, then it's smart business.
A group of truckers attempted this back in the 80's. I believe it was called "Serpico" (if memory serves me right). They offered very competitive premiums and frankly, beat us hands down the majority of the time.
The only problem what that the monies received in premiums were kept in an offshore captive (Panama, Bermuda, Grand Caymens, don't really remember).
Then reality hit (which didn't take long). Claims came in and were not paid. It seems to me that there were not enough funds to pay the claims and consequently it fell apart.
Keep in mind that you need an insurance company that is admitted in the U.S. to "front the paper" as it's called in our industry. A company that FMCSA will accept for filings.
Or you could go with a Risk Retention Group, such as OOIDA has. Set-up here is no easy task. It requires MUCH research and lots of backing.
When you talk about taking money from one pocket and putting it into another, I believe your referring to taking money from an asset account and putting it in a claims reserve type account.
While the idea is a good one, it requires a substantial amount of monetary backing.