In the insurance world, companies with strong safety records and minimal losses often expect their premiums to reflect that performance. But for one Louisiana-based oilfield transportation company, the reality was quite different. Despite having minimal losses, their insurance costs kept climbing—sometimes by as much as double from one year to the next. They were told these increases were “a good deal” for Louisiana, but they knew there had to be a better option.
The Challenge: Rising Premiums with Limited Control
The company, with around 70 trucks on the road, was facing annual premiums totaling more than $1,300,000. Each year, they were at the mercy of state market conditions, carrier underwriting profits, and limited options. Frustrated with the lack of control and the high costs, they sought a new approach that would give them more say in their rates while still meeting the coverage requirements of their customers' Master Service Agreements.
The Ross & Yerger Solution: A Captive Insurance Transition
Ross & Yerger stepped in to review the company’s insurance program. Our team quickly identified that the company’s traditional insurance program was not benefiting them but likely subsidizing the losses of others. Ross & Yerger recommended transitioning to an alternative risk financing option: a group captive insurance program.
This program, designed specifically for oilfield service companies across the United States, allows members to pool their resources and purchase insurance based on their own loss histories. With this tailored approach, members with lower losses are rewarded with lower rates.
The Results: Significant Savings and Greater Control
The shift to a group captive resulted in immediate and significant savings. At the time of the transition, the company saw their premiums drop by over $500,000. Now, a year later, the company has realized total savings of over $950,000 compared to their previous traditional insurance program. But the benefits go beyond just premium savings. The company now feels more in control of its insurance rates and is no longer forced to bid out its coverage each year.
Traditional Insurance Program vs. Captive Insurance Approach
Ross & Yerger’s captive insurance solution provides several distinct advantages over traditional insurance:
Traditional Insurance Program | Ross & Yerger Captive Solution |
Higher fixed costs | Rates determined by your actual loss experience |
Limited to state and market conditions | Lower rates over time than the traditional marketplace |
Carrier keeps underwriting profit | Return of underwriting profits to the client |
Limited control over claims | Greater control over claims settlements |
No investment income | Earn investment income on premiums paid |
Why Consider a Captive Solution?
For companies in high-risk industries like oilfield transportation, a captive insurance model can provide a better way to manage costs and gain more control over claims and settlements. Rather than facing unpredictable rate hikes, companies in a group captive benefit from a structure that reflects their safety records and rewards them for low losses.
Conclusion
The transition to a captive insurance model allowed this oilfield transportation company to save nearly a million dollars in premiums while gaining more control over their insurance future. If your business is looking for more predictability, savings, and control in your insurance program, a captive solution could be the right choice.
At Ross & Yerger, we’re dedicated to helping businesses find the best insurance solutions to support their success. If you're interested in learning more about how a group captive could benefit your company, please reach out to our team for a consultation.
Jacob Haralson
Chairman of the Board
601-944-0961
Jacob Haralson is Vice President and Shareholder at Ross & Yerger and is the Oil & Gas Team Lead. Haralson specializes in Oil & Gas Services & Food Processing.
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