“Don’t bother doing something unless you’re radically different from the competition” – Richard Branson
A Synthetic Captive has similar advantages of a Captive including underwriting profit sharing and pooling of selected risks only.
For example, Reference Based Pricing plans base plan claim payment at a significantly lower % of Medicare than do traditional PPO plans, yet these risks are pooled together. As a result, Reference Based Pricing plans don’t receive the full underwriting credit they deserve. A captive solves that problem.
What differentiates a Synthetic Captive from a Captive includes (1) No upfront collateral, (2) No responsibility for underwriting losses, (3) No complex legal structure to join, and (4) Participating Employers will not subsidize each other’s premiums.
A zero-overhead Synthetic Captive approach provides long-term rate stability and smoother renewals through the application of proper underwriting credits members deserve.
Related Blog Posting: Risk Managers Risk Pool
