Hunter Nelson explains when captive insurance makes sense for a business. You need substantial insurance spend and strong operational controls, not just a small firm looking to save money. He gives specific spending thresholds to determine if it's worth the setup.
Between $500,000 and $10,000,000 per year.
Around $10,000 per year (i.e., too small).
So get into a captive when you can, make sure it makes sense. You get the money set aside, make sure you're paying a lot of insurance. You're a big enough business. Again, this is not for the people paying $10,000 a year. This is for the people paying 500,000 a year to $10 million a year. And you're a clean, well run business. This is not. Again, it's not a deal where hey, paying insurance. Too expensive. But I don't, I, I don't run my business. I, I don't have. You're not investing your business. I don't have a safety manager. I just want to get my cost down. It's captives are not for you. The risk is too great and it's not going to make sense for you.
