Group captive insurance programs can be an attractive alternative to traditional insurance. Captives offer a new level of control and financial independence no matter what the cycle of the traditional insurance market.
What is a group captive? It’s an insurance company that provides insurance to and is controlled by its owners. In short, you (and other businesses) own the company that provides your commercial insurance. Which means that you have greater control, and you – not an insurance company – benefit when the captive is profitable.
There are two primary forms of group captive insurance. The first is a homogeneous group- like kind businesses from same industry joining together. The second is a heterogeneous group, made up of many diverse businesses joining together. Hetero groups will almost always have lower operating expense and reinsurance costs than a homogeneous group. So, unless you are specifically a trucking Company or a roofing Company or a temporary agency, then most likely you will fit into a heterogeneous group. Our current group captive clients are involved with Construction, Manufacturing, Wholesale and Retail, Transportation and Service Industries.
As a shareholder, you will have minimal administrative obligations. The program is administered by a captive management company that provides the necessary structure, claims management, legal, accounting and other functions necessary to operate.
Benefits of a Captive
- Greater control over your insurance program
- As a shareholder, you accrue tax deferred underwriting profit
- As a shareholder, you benefit from investment income
- Premium calculation is based on your prior five-year loss history, not industry averages
- 60-68% of premiums will be available to fund losses and generate investment income
- Significantly greater control over claims management
Consider a Group Captive if Your Company meets these criteria:
- A favorable prior loss history
- A commitment and culture of controlling losses
- Financial stability
- Casualty premiums that currently exceed $100,000 (auto liability, auto physical damage, workers’ compensation and general liability)