Hunter Nelson argues insurance companies aren't the scam people think. Most insurers don't make huge profits. A company paying $1 million in premiums with $500k in claims should consider switching to captive insurance, which works best for businesses with loss ratios below 65%.
A lot of people think, everybody thinks, I mean, 90% of people I talk to think insurance is a scam, they're making beaucoup bucks off of me. I mean, I just think about myself for my business, my auto insurance, my home insurance. Also, I've never turned in an auto claim, I've never turned in a home claim, but you got to remember that, or you got to keep in mind that these insurance companies are not making beaucoup bucks. And it doesn't mean the second you can, you're going to instantly make money going to captive. So it just all, it just kind of depends out there. But I would say most of the time, a lot of the time captives are going to be cheaper, especially if, like I said, you have a low loss ratio. You're going to return $1 million in premium, you pay $500,000 on claims, you have a 50% loss ratio. If it's below 65, 100%, probably makes sense to get into captive.
