Tuesday, January 28, 2014
Captive insurance companies are an increasingly popular option for medical practices looking for increased insurance coverage, asset protection, and tax advantages. Here are some basic due diligence questions for physicians that will help them better understand the prospective captive provider:
- Does the attorney-client privilege apply to our relationship?
- How long have you been creating captives and how many have you created?
- Do you have E&O or professional malpractice coverage?
- What is the first-year set-up cost of establishing a captive?
- What are the recurring maintenance costs?
- Will I need to pay outside counsel for issues like compliance and accounting?
- How many of your captives have been audited and been “no change” required after the audit?
- Does our relationship include the cost of defending an audit?
- Can you provide client references?
- How many years should I expect to maintain the structure?
- How can I wind my captive down and what are the costs involved?
- What jurisdictions do you set up captives in and what are the advantages of those jurisdictions?
- What additional risks can the captive insure me against?
See Ike Devji, Questions to Ask Captive Insurance Provider – Asset Protection – Due Diligence, Pro Asset Protection, Aug. 1, 2012.