Maximize Control Over Your Business Risks and Boost Profitability with P.O.R.Cs

In the past, large corporations have employed various strategies to mitigate risks, reducing insurance costs, enhancing risk management, and leveraging accounting loopholes. Now, smaller businesses and groups can access similar advantages through alternative risk transfer methods.

What is a P.O.R.C ?

A Producer Owned Reinsurance Company (P.O.R.C) stands as an innovative insurance entity that assumes the responsibility of reinsuring the risks associated with its affiliated businesses or a consortium of companies. Unlike traditional insurance setups, where risks are solely underwritten and issued by third-party insurance companies, P.O.R.Cs actively engage in participating in some or all of the risks involved in policies.

How does it work?

A P.O.R.C operates as an insurance entity that reinsures the risks of its affiliated businesses or a consortium of companies. By assuming underwriting risks, PORCs enable businesses to reduce insurance expenses, improve risk management strategies, and access additional coverage options tailored to their specific needs.

Why P.O.R.C ?

The Purposes of Forming a P.O.R.C Include:

Wealth Accumulation

Minimize Insurance Cost

Improved Cash Flow

Control Risk

Risk Management Solutions

Tailored Coverage:

Tailored Coverage options are available to meet specific needs, such as Government Administrative Actions Insurance, Mechanical Breakdown Insurance, Legal Defense Insurance etc.

Medical Malpractice:

Hospitals and physician groups can secure reinsurance for their medical malpractice risks, leading to potential underwriting profit and better control over losses and claims.

Creditors & Financial Institutions:

Underwritten creditor/insured coverage options are available, including collateral protection, vendor single interest, various credit risks, and credit default, providing comprehensive protection.

Property Coverage:

Large property holders benefit from a Property Owner’s Reinsurance Company (PORC) for comprehensive or layered property coverage, reducing overall insurance expenses.

Construction Risks:

PORCs cover construction defects, mold issues, and general liability risks, enhancing developer profitability and cash flow.

Manage Hidden Risks Efficiently

Transform self-insured risks into tax-deductible premiums through a PORC, mitigating various hidden risks including auto, liability, property, and more. Benefit from potential profits while ensuring comprehensive coverage.

P.O.R.C Benefits

Asset Protection:

PORCs, like other insurance structures, offer robust asset protection benefits when properly established.

Taxation Benefits:

Operating under special tax regulations, PORCs enjoy the exclusive benefits of statutory accounting, a privilege reserved for insurance entities.

Risk Management:

Serving as a central hub for risk management and financing activities, PORCs become a profitable component within affiliated businesses. Unlike conventional insurance, PORCs incentivize improved risk management.

Increase Cash Flow :

PORCs can generate investment income from upfront premiums, managing an investment portfolio to maximize cash flow potential alongside underwriting profits.

Cost Reductions

Transitioning to a PORC structure enables owners to directly participate in underwriting profits, resulting in substantial cost reductions.

Coverage Accessibility:

When commercial coverage fails or prices skyrocket, PORCs offer tailored solutions through third-party insurers, ensuring comprehensive coverage at competitive rates.

Succession Planning:

PORC reinsurance arrangements provide strategic solutions for business owners with estate planning goals, offering advantageous avenues for succession planning.

Underwriting Stability:

PORCs exhibit resilience against the cyclical fluctuations typical of conventional insurance markets, providing stability essential for businesses requiring accurate financial projections.

Choice of "Ownership"

PORC ownership offers considerable flexibility, often mirroring or aligning with business ownership. For business

owners prioritizing succession planning, a PORC presents significant opportunities.

Businesses Suitable for P.O.R.C’s

PORC’s insurance companies are appropriate for all types of businesses, including:

Construction

Energy

Distribution

Engineering

Aviation

Creditors/Finance

Franchising

General Contracting

Healthcare

Aerospace

Hospitality

Manufacturing

Professional Services

Real Estate Development

Truck and Motor Freight

Restaurants

Retail

Transportation

P.O.R.C’s can lower the cost of insurance...

Embracing a PORC allows cost reduction across multiple insurance areas by managing lower severity risks internally

and leveraging a larger carrier for catastrophic risks. The insured business assumes a substantial deductible,

with an Unrelated Third-Party Insurance Company issuing a policy directly for this layer, which is then

transferred to the PORC per the reinsurance agreement.