Sometimes the right answer is the boring one.
This section of our site explains alternative risk financing. This page is where we tell you when not to use it. Most brokerages with a captive program will not publish that page. We think it is the most important one here.
What is guaranteed cost insurance?
Guaranteed cost is the structure you already know: a fixed premium, set in advance, and the carrier absorbs the claims whether the year runs clean or ugly. It is the default structure in commercial insurance, and it is the default for a good reason. You are buying certainty, and for most businesses certainty is worth the margin the carrier charges for it.
When is staying traditional the right call?
- Your casualty premium is below the size where retention structures pay for their own complexity
- Your losses are driven by severity and luck rather than predictable frequency
- Your cash works harder in the business than it would sitting in a loss fund or a collateral account
- You are not ready for a multi-year commitment, and alternative structures punish short-timers
None of those are failures. They are facts about where a business is right now, and the structure should fit the facts.
Why would a captive brokerage tell you to stay put?
Because the diagnostic is not a sales funnel. When we finish a Business Risk Diagnostic™, the recommendation lands wherever the numbers land: go to market, negotiate with your current carrier, move to a retention program, explore a captive, or change nothing at all. A recommendation to stay exactly where you are is not a failed diagnostic. That is the diagnostic working.
Insurance is just risk tolerance. Every structure on this site is fine as long as you understand the risk you are keeping and the risk you are transferring. Our job is to make sure you understand both before you sign anything.