If you’re reading this, it’s likely your clients are frustrated with sudden premium hikes from Federated Insurance, despite having a clean claims history. These conversations can be tough, especially when your best clients have done everything right to manage their risks.
Why are they seeing these increases? And more importantly, how can you help?
At Captive Coalition, we work with independent agents to help them protect their top clients, particularly during moments of frustration. We provide education on captive insurance so you can offer solutions that keep your best clients protected while controlling their costs.
By the end of this article, you’ll understand why these rate hikes happen, how to explain them to your clients, and what alternatives you can offer to help manage their premiums.
Here’s the core issue: insurance rates can go up even when a client has a perfect claims history. Federated Insurance, like many traditional carriers, operates on a pooled risk model. This means premiums are shared across businesses in the same industry. If other businesses in your client’s industry are experiencing losses, your client’s premiums may increase, regardless of their own claims.
For example, wildfires in California might lead to increased rates for auto dealers across the country—even if your client’s business isn’t in the affected area. This method of “class underwriting” is often the reason for unexpected rate hikes.
When premiums rise, your clients will naturally look for ways to reduce costs. Here are a few strategies you can discuss:
Captive insurance isn’t for everyone, but it can offer long-term savings for clients who prioritize safety and risk management. Clients avoid market-driven premium hikes and can benefit from the captive’s profits when things go well.
When introducing captive insurance, you may encounter these common concerns. Here’s how to address them:
Dealing with insurance premium increases is never easy, but educating your clients on their options—including captive insurance—gives them a chance to take control of their costs. Your role is to offer honest advice, expertise, and an understanding of both traditional and captive insurance models to find solutions that align with your clients’ long-term goals.
To better understand captives, check out our article comparing captives to high-deductible plans and see which option might work best for your clients.
For a deeper dive into captives, read our Captive Insurance 101 Guide to better understand the basics and help your clients.
If you have any other questions about captives or would like to schedule a consultation, contact one of our advisors at Captive Coalition.