Invariably at little league games or parenting events for my kids at some point I will have the polite conversation of ‘so what do you do?’ In trying to explain that I am the President of Sage Family Association and we specialize in covering the medical aspect of a Surrogate’s Birth Plan, I am often met with blank stares. The confusion I face from other parents is also mimicked within the surrogacy industry itself when I try to explain how Sage is significantly different than other similar . The coverage option offered by Sage is using a domestic captive insurance coverage, specifically created for the association.

Captive insurance companies allow businesses to control their insurance costs and coverage. These entities are created and wholly owned by one or more non-insurance companies to insure the risks of their owners and members.

Captives are often created for large corporations because the company can tailor what the captive provides. Companies like Amazon create a health insurance captive because Amazon believes they can better control the costs. Surrogacy insurance is a unique need that is challenging to insure in the traditional insurance market. Many health insurance companies are simply unwilling to cover and exclude coverage for compensated surrogates. Currently, the only consistent source of health insurance for surrogates is through a limited few brokers who sell foreign coverage to cover U.S. surrogate clients. The ACA costs are not fixed and generally vary. Some considerations include the insureds location, age, income, type of plan needed, which tier, and premium. The insured may also need a ‘catastrophic policy’ for an additional $10,000 in the private market. 

Not all captive insurance companies are equal. Some captives are U.S.-based and some are created to exist offshore in a foreign country. Whether a captive is U.S.-based or offshore is extremely important as it can significantly impact the company’s operations, regulatory compliance, and financial requirements.

A real-life example of an offshore captive was Omega Prime Insurance. Omega was an offshore insurance captive that provided health insurance for surrogates. Cayman Island governments’ regulations and requirements are much less stringent than the United States’. Cayman Islands  law did not require the scrutiny or level of audits to ensure Omega was operating properly and was adequately funded. In the United States, Omega would have been required to set aside reserve money to cover the outstanding obligations created under its surrogate health insurance policies. Omega should have invested a percentage of its premiums to cover the outstanding risk pool (i.e. Surrogates already covered and pregnant). For instance, if Omega was providing $5 million dollars in health insurance policies to surrogates, it should have reserved a percentage of that $5 million to account for potential unforeseen risk. U.S.-based captive insurance companies have laws that require captive insurance companies provide such reserves. While Omega did not adhere to this standard, this is a primary requirement for all U.S. based insurance companies.

Omega went bankrupt in 2019. Coverage issues coupled with the fact that there simply was not enough capital in the offshore account to provide coverage for their clients claims. If Omega had been U.S. based captive, their lack of risk pool reserves would have been exposed early through required audits of the company by the Department of Insurance. Sage is registered with the Department of Insurance.

Sage is different. When forming Sage, we strategically decided it was imperative that we were a US-based captive. Sage did not want to be, nor be perceived, as another Omega. Sage was formed by members of the surrogacy industry who saw the need to ensure Omega would never happen again. Sage was created to meet and exceed the rigorous regulatory environment of U.S.-based captives. States like Vermont, Delaware, North Carolina, and Utah have well-established regulatory frameworks that provide stability and predictability for captives. Sage is audited quarterly by the state’s Department of Insurance where we are registered. The quarterly audit ensures Sage has adequate reserves to cover claims of current insurance holders. Sage benefits from the expertise and support of a well-established regulatory framework and working with experienced service providers.

Sage is also subjected to U.S. law. Because of this, Sage is a credible, trustworthy partner. We knew Sage must stand for integrity and industry best practices to refute the negative insurance stereotypes perpetuated by Omega and SEAMS.

I know explaining captives still may not help me with my next birthday party or sporting event conversation. But hopefully, it will help those in the surrogate industry to understand why Sage is unlike its predecessors and is a best-in-class option for surrogates.  

If you would like to discuss our offerings in greater detail, please reach out to

John.Reed@SageFamilyAssociation.com

JM-R

Or want to learn more about your options for Surrogacy and IVF and how we can help protect you on your journey, including the costs? Please, contact us today at www.SageFamilyAssociation.com or by calling 984-303-1041.