Arkansas insurance commissioner urges captives over self-insurance for workers’ comp

Allen Kerr, who recently approved the state’s first captive insurer, is encouraging companies to form captives to cover comp risk rather than self-insure

Insurance News

By Lyle Adriano

The Arkansas Insurance Department announced Jan. 23 that Baptist Health of Little Rock has created the state’s first captive insurance company.

The insurance company, called Diamond Risk Insurance LLC, serves as a subsidiary of Baptist Health.

As a captive insurance company, Diamond Risk will insure the risks of its parent company, Baptist health covering for the company’s 8,000 in the state alone.

Other business coverage, such as property and casualty insurance, may be added to the policies.

Baptist Health executive vice president Bob Roberts described the creation of a captive insurance company as part of the natural progression of Baptist Health. "This was a next step from self-funding some of our risk management costs and putting it into our own company," he added.
Roberts hopes that with the new changes, costs will level out over time.

Captive insurers are organized under state law and regulated by the State Insurance Department, compared to self-insurers that are regulated by the federal government.

"By creating its own captive insurance subsidiary, Baptist Health reduces its dependence on the year-to-year volatility of purchasing insurance on the commercial market," insurance commissioner Allen Kerr remarked in a statement.

It is hoped that other insurance companies in the state would follow suit.

"We would hope that because Baptist has such a reputation across the state that other companies in a similar position would take a serious look at it," said Insurance Department spokesman Ryan James.
 

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