Prior to the new millennium, Physicians were trained not to admit medical mistakes nor apologize to the patient or patient’s family under any circumstances. The rationale was that by a physician acknowledging their mistake, the severity of the claim would go up significantly.
In retrospect, by Physicians not apologizing or acknowledging their mistakes, losses were higher than when physicians acknowledged their mistake and apologized for their mistake.
Fortunately, the new millennium now encourages physicians to apologize for their mistake without fear of reprisal due to new laws. It is ironic how a simple apology can reduce the size of a malpractice claim.
Consequently, captives would not usually be a good business decision for a business who consistently experience poor claims history, although there are always exceptions to this rule. For example, if a business eliminates a product or service that lead to a long history of claims, a captive could make sense. Businesses who take risk management actions which lead to a significant reduction in claims over a significant amount of time should also consider captives.