The Importance of Captive Insurance

Policies that insure a person in spite of the absence of bodily harm, that exist because of the threat of reputational harm—these policies are hard to find.

Image

Life insurance policies abound, but policies that insure a person in spite of the absence of bodily harm, that exist because of the threat of reputational harm, that ease the degree of harm—these policies are hard to find. These policies are also expensive, regardless of whether a person is rich and famous, or more famous than rich, or famous but not rich. These policies are a necessity for people at the commanding heights of society, because no one has total command of what anyone can do to a person’s reputation. Captives of chance, we have the chance to benefit from captive insurance; we have recourse from the infliction of harm.

As an alternative to traditional commercial insurance, captives participate in the alternative risk transfer (ART) market. Because of this alternative, captives risk their own capital; they accept the risks of forming their own insurance companies, of having parent groups create these companies for them, so they may avoid volatile pricing and difficulties in purchasing the policies they want.

By developing bespoke policies, captives can reduce costs, increase cash flow, write policies, set premiums and return or reinvest unused funds. As a specific type of insurance, representing the thoughts of people in positions of leadership, as an example of insurance thought leadership, captive insurance makes sense. (Please note: These policies are rare, which is not to say these policies do not exist. Insofar as these policies are available, they tend to originate from offshore insurers. More common are deductible reimbursement policies, where companies increase deductibles with their respective carriers. Captives assume the risk of paying deductibles when they file a claim with traditional carriers.)

As history proves and as a footnote to history confirms, vandals would replace a life of service with headlines from a person’s time as a public servant. The death of Raymond J. Donovan, labor secretary in the Reagan administration, underscores this point: that vindication in a court of law is no shield from vilification via the court of public opinion, that an acquittal is no guarantee of absolution from the influencers of public opinion, that these facts beg the question; that Donovan asked the question himself, “Which office do I go to to get my reputation back?”

Donovan’s question was rhetorical then, but it need not be—it should not be—now. Not when anonymous forces can harm a person’s reputation in seconds. Not when the slings and arrows of outrageous lies can exhaust a person’s fortune. Not when it can be a person’s misfortune to see his life’s work collapse in real time.

See also: How Life Insurers Can Reach Millennials

Insurance from reputational harm may be the only way to ensure loss of livelihood does not lead to loss of life, that character assassination does not lead to self-harm, that a leader does not commit suicide. Unless a public figure has this insurance, or knows that captive insurance is a means of buying this insurance, reputational harm can be hurtful indeed; so hurtful as to be harmful to the survival of the body politic and the success of the nation.

If first-rate leaders choose not to put their country first, if the choice is not theirs to make in the first place, if they are not free to choose because of what they may lose, because of what the enemies of freedom want them to lose, their sacred honor, then America loses.

We must not lose.

Read More