This question is in response to this statement in the OC steam thread.

"Self-insurance is a terrific idea. When I was in the engineering business and saw my premiums (with no paid claims) go up 20X in one year, I hopped on a plane and flew to Barbadoes and had Marsh Mac formed a "captive" insurance company."

My quuestion is: Since the alien insurer was captive and not soliciting business from the public were you required to have the normal certificate of authority, documentary and financial examinations, capitalization requirements, etc?

As much as I like your idea, the cash strapped business of tourist/preservation railroading is unlikely to be able to meet the huge start up costs involved in starting up an insurer unless the normal requirememts are waived/reduced
and unless of course the normal squabbling is put aside for the betterment of all.



superheater@rrmail.com

To the best of my recollection I had to capitalize the company at $500,000. There were annual fees to Marsh Mac, The Corporate Sec service, the auditors, the local legal representive. There were no local taxes or significant fees to the government. The premiums were NOT deductable in the US but when the operation closed there was no tax on the repatreation of the globs of money that built up over the years. I had to consider what I believed the risk to be, and for my operation it was clear that it was a very significant and wise choice. Even if only to get away from the parasite lawyers who viewed the old-line insurance companies as the client, not the insured.

This was a captive and the rules might be different for more than one operation. I was approached by others in the same field to sell them policies, but I said no because you have to be very disciplined in your operation to really minimize the risk.

One of the big problems that forced me to make the decision was the fact that at that time, insurance companies changed their policy form from "occurance" to "claims made" which really cut their exposure for any prior acts which they insured and for which a claim was not made in the year when the work occured.

It only works with discipline and the realization that you were going to have to play hard-ball. the other safety feature was that the policy did not "pay-on-my-behalf", but rather indemnified me if and when I decided to pay a claim. I made sure that all the "assets" on the underlying operation were impecably encumbered. So that if there was a judgement against the operation the slip and fall artist would not have an easy time collecting their ill-gotten gains!

v-scarpitti@att.net