Captive Insurance: A New Way to Empower our Farmers and Ranchers

As working farmers and ranchers ourselves, we understand the stresses that come with growing the food that sustains us all. That’s why we’re so excited to introduce a better way to manage risk and save money: captive insurance.

This innovative solution is gaining popularity among those looking for alternatives to traditional insurance. Now, this customized approach is available to you for use in protecting your business and controlling your financial future. This article will share how the model works and what motivates our work.

Meet the Co-Founders Behind 3F Captive Services

Our journey began with a shared vision of helping farmers and ranchers manage risks on their own terms.

• Patrick Johnston, a farm owner and co-founder, knows firsthand the challenges farmers face. Patrick’s personal experience inspired our mission to create a product that serves the agricultural community with integrity and understanding.
• Jonathan Strike brings a strong background leading financial services and risk management across multiple industries. He’s passionate about creating solutions tailored specifically for agriculture.

What is Captive Insurance and How Does It Work?

Captive insurance is a model where businesses own their insurance company outright, allowing them to customize coverage, retain premiums, and gain financial control. You’re in the driver’s seat, owning 100% of the company. It’s often used as a supplement to traditional insurance, helping cover risks often ignored by standard policies. In this model, the premiums you pay become your assets.

Key Features of Captive Insurance:

• Ownership and Control: You own the captive 100%. It’s not a workers’ comp group or a pooled risk program—you keep the premiums after claims and losses.
• Financial Empowerment: Captive insurance allows you to manage your financial future. You set the terms, control policies, and decide how claims are handled. As premiums accumulate within the captive, dividends can be paid to you or your beneficiaries as you see fit. This is a level of customization that traditional insurers can’t match.
• Supplemental Coverage: Captive insurance works alongside your existing policies to fill gaps and cover risks that traditional insurance won’t touch.

Turning Risk into Opportunity

Imagine a farmer with 500 acres of crops, a few employees, and various pieces of equipment. Traditional insurance might cover some of their needs, but gaps—such as market risks, crop loss, or labor issues—can leave them vulnerable. A captive insurance program allows you to:

• Customize policies for specific risks.
• Capture the value of self-funded premiums with potential tax advantages.
• Turn risks into profit by building capital within the captive.

For example, a heatwave devastated dairy farms across California. Many farmers suffered significant losses without protection for lost milk production or deceased livestock. A captive insurance program could have provided the financial support needed to withstand that crisis.

What Can Captive Insurance Cover?

One great aspect of captive insurance is its flexibility. If it’s a risk your business faces, it can likely be covered. Common coverages include:

• Crop Insurance: Yield protection, revenue stability, and coverage for specialty crops.
• Livestock Insurance: Disease outbreaks, mortality, and feedlot risks.
• Worker-Related Risks: Employee legal actions and liability for agricultural labor.
• Environmental Liability: Protection against pesticide runoff or waste management claims.
• Business Interruption: Income loss due to machinery breakdowns or natural disasters.
• Market Risks: Business interruption, contract breaches, and commodity market volatility.
• Emerging Risks: Cybersecurity for agritech or combating threats to crops and livestock.

Why Choose Captive Insurance?

Captive insurance offers several advantages:

1. Cost Control: Instead of paying premiums to traditional carriers, you build equity in your captive.
2. Risk Management: Tailored policies ensure you’re better protected against unique risks.
3. Direct Access to Coverage: Faster claims processes and fewer bureaucratic hurdles.
4. Tax Benefits: Self-funded premiums often come with significant tax advantages.

Is Captive Insurance Right for You?

Captive insurance is an excellent fit for farmers, ranchers, and agribusinesses with significant insurable risks. The appropriateness of the model will depend on the size and scale of your operation. Our team would love to explore your needs together and discuss the best path for you.

Partnering with 3F

We don’t sell insurance. At 3F, we work hand-in-hand with farmers and ranchers like you to understand your unique challenges before we design and manage a captive insurance program that you own that aligns with your business goals and risk profile.

Our Sweat. Your Equity.

We make setting up your captive insurance company a smooth and guided process. We cover the setup, management, and compliance reviews, allowing you to focus on what you do best—running your agricultural enterprise.

Starting your own captive insurance program with 3F Captive Services is straightforward:

1. Assess Your Risks: Work with us to identify gaps in your current coverage.
2. Design Your Policies: Collaborate to customize a program tailored to your business needs.
3. Launch Your Captive: Take ownership of your insurance and start building equity.

Summary

Captive insurance is more than just an alternative to traditional insurance—it’s a way to take control of your risk, save money, and gain transparency in your coverage. Join a community of like-minded agricultural professionals who are embracing this innovative approach to protect their livelihoods. Contact us today.