5-Year Cost Comparison

Ballast Mutual is not designed to produce a much lower Year 1 premium bill. It is designed so that more of the long-term value stays with your company instead of with a commercial carrier.

The figures below come from the downloadable model, for a company with $500,000 of Year 1 traditional premium. They are illustrative only and are not a quote or guarantee.

Base case assumptions

• Year 1 traditional premium of $500,000, held flat across the five years
• Captive premium at 1.00 times traditional (no assumed rate discount)
• 25% expected loss ratio, giving expected claims of $125,000 a year
• A $25,000 deductible under the traditional program, and a $100,000 retention under Ballast Mutual
• 40% traditional insurer expense and profit load
• Premium allocated 20% to the Independent Account, 45% to the shared Group Account, and 35% to expenses and reinsurance
• Independent Account capital of 25% of premium ($125,000), contributed once in Year 1
• 5% investment return on capital and retained surplus
• Modelled pre-tax over five years, beginning 2027

How to read this

• Net cost of risk is premium paid, plus losses inside your retention, less surplus and investment income returned to you.
• Under traditional insurance nothing comes back. If losses run below expected, the insurer keeps the difference.
• Year 1 cash under Ballast includes $125,000 of Independent Account capital in addition to premium. That capital is yours, not a fee to Bearing Risk.
• Independent Account equity is not the same as cash available on demand. Exit timing and regulatory requirements still apply.
• The model runs pre-tax. Tax treatment depends on your own facts — see Independent Account Tax Treatment.

Important scope limit

The two columns do not carry the same retained risk. This base case pairs a $25,000 deductible under the traditional program with a $100,000 retention under Ballast Mutual — four times as much loss absorbed by the member before cover responds, and $375,000 more of it across the five years. That difference is counted in the figures above, but it is a genuine transfer of risk onto the member and not a pricing saving.

That larger retention also keeps expected losses out of the shared Group Account entirely in this case, so the base case credits the member with the full shared-layer surplus — about three quarters of the modelled gain. The Group Account is pooled with other members, and their claims reduce the surplus available to everyone. The downloadable model exposes that share as an input; lower it to see the effect on your own result.

Frequent or severe losses in the Group Account can reduce surplus available to all members. That is why Ballast Mutual is selective about who joins. Members should be able to demonstrate operational safeguards and strong risk mitigation.