New Jersey Flooring Company Turns Insurance Into a Strategic Asset
A New Jersey-based flooring contractor with approximately $10 million in annual sales and 30 employees was producing strong operating results, but its insurance program was not rewarding the company’s performance. With a five-year loss ratio of approximately 17%, the business had significantly outperformed what the traditional insurance market typically expects from an account of its size and class.
- Industry: Flooring
- Location: New Jersey
- Captive Premium: $310,000
- Captive Coverages: Auto Liability, Physical Damage, Workers Compensation, General Liability
- Captive Type: Group
Challenges
Despite its favorable loss history, the company remained in the traditional insurance market, where the overwhelming majority of its premium dollars were being retained by the insurance carrier. In practical terms, more than 85% of the premium paid by the company was benefiting the traditional market rather than the insured itself.
For a well-run business with disciplined operations and a strong claims record, that model creates a clear imbalance. The company was effectively subsidizing insurer profit instead of putting its own performance to work for its balance sheet.
Union Risk Services Solution
Union Risk placed the company into a group captive program with approximately $300,000 in captive premium. The move was designed to better align the company’s insurance costs with its actual risk performance and create a more sustainable long-term structure. By transitioning into the captive, the client gained:
- Long-term premium stability
- Rate certainty for the next 22 months
- A structure that allows strong loss performance to create value for the insured rather than the traditional market
- A clearer path toward improved enterprise value
Results & Impact
Instead of continuing to rent insurance from the traditional market, the company is now positioned to own a portion of the underwriting results tied to its own performance. With rates locked in for the next 22 months, management has greater predictability for budgeting and planning. More importantly, the captive structure creates the opportunity for long-term financial benefit if the company continues to perform the way it has historically.
Union Risk Perspective
This flooring company is a strong example of why more disciplined middle-market businesses are exploring captive insurance. When a company has a low loss ratio, solid revenue, and operational consistency, it should not be stuck in a system where the traditional market keeps nearly all of the upside. By moving this client into a group captive, Union Risk created a strategy centered on stability, control, and long-term enterprise value.
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