Self Insureds

Pinnacle did an excellent job, both crafting the report, and presenting the material. We welcome the opportunity to work with them again, and recommend them to others without reservation.

— National Healthcare Association

Services

Self Insureds

Self-insurance programs, which allow companies to pay some portion of their insurable loss exposures, come in all shapes, sizes and types. Multinational corporations, single state operations, large deductible and retrospectively rated policies, risk retention groups (RRGs), and captives — including 831(b)s, single parent captives, segregated cells, and group captives — all play critical roles.

As nationally-respected experts in alternative markets, Pinnacle provides a full range of actuarial services to a wide variety of self-insureds, including traditional loss reserve analysis for exposure within deductibles or self-insured retentions. We can compare alternate program structures, analyze retention levels and develop feasibility study documents, along with a wide range of other services.

Our expertise comes from having a team of experienced consultants with deep understanding of the challenges self insureds face, but also with the local knowledge unique to individual market segments, such as:

  • General liability for contractors 
  • Medical professional liability for physician groups and hospitals 
  • Workers compensation for temporary staffing firms 
  • Law enforcement liability for public entity pools 
  • Commercial auto liability for trucking companies, bus companies and taxicabs

As well, we are well versed in the intricacies of mechanisms for alternative markets structures, including:

  • Large deductible policies 
  • Retrospectively rated policies 
  • Single parent captives 
  • 831(b) captives 
  • Group captives 
  • Agency captives 
  • Association captives 
  • MGA-controlled programs 
  • Risk retention groups (RRGs)

Case Studies

Captive Dividend Assessment
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Captive Dividend Assessment

An onshore, single parent captive was concerned with the amount of retained earnings and wanted to establish a policy for the minimum capital for the program to trigger dividend distributions. Pinnacle compared the program’s capitalization to a wide variety of industry standards for similar programs from rating agencies, regulators, and other sources. The results of this analysis lead to a recommended board policy regarding a minimum capital threshold for dividend distributions and ultimately to a significant dividend being declared to the parent company.

Self Insured Loss Reserve Analysis
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Self Insured Loss Reserve Analysis

Pinnacle was approached by a major, national manufacturer to perform a loss reserve analysis of their retained workers compensation, auto liability, general liability and products liability loss exposures. The previous actuary worked for a large broker which the customer felt presented a conflict of interest. In addition, the actuary used industry benchmarks that the customer felt did not accurately represent their loss development behavior. Pinnacle worked with the customer to better understand their loss exposures, claims handling practices, and corporate risk management philosophy. We worked with the company to gather better internal data and refine the industry benchmarks to better reflect their third party administrator, industry focus and geographic mix. These refinements, and many others, led to a more accurate analysis of the company’s retained loss exposures, a reduced provision for unpaid claims on their balance sheet, and reduced collateral requirements from their fronting carrier.

Staffing Self Insured Reserve Analysis
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Staffing Self Insured Reserve Analysis

Pinnacle was retained by a group of staffing companies with large self-insured retentions for their workers compensation loss exposures to perform quarterly loss reserve analyses and annual funding studies. Pinnacle initially used customized benchmarks for the staffing as the basis for our analyses. However, it became apparent that the benchmarks were not reflective of the unique characteristics of this program. Pinnacle worked with the third party administrator (TPA) for the program to gather additional historical experience for the program, as well as consolidated experience for several similar programs administered by the TPA. Using the results of our analysis of the TPA’s previous experience for this program and others like it, we were able to develop benchmark loss development assumptions that tracked much more closely with the program’s actual loss emergence.

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