Casualty Group Captive Fast Facts Recap

By Jenna Mahannah October 06th, 2023

Over the last couple of months, we released a series of need-to-know facts about our casualty group captive model. Below, you will find a summary of these facts, along with some additional resources to help you better understand the benefits of our group captive insurance model.

Group Captive Fast Fact No. 1:

The group captives that we support are 100% member-owned and member-controlled, and all members have an equal vote, regardless of size. Group captive insurance allows businesses to become owners of their own insurance companies rather than insurance buyers.

Group Captive Fast Fact No. 2:

Our group captive insurance model provides member-companies with more control over their insurance costs. The group captives we support derive premium primarily using each member’s individual 5-year loss history. So, when group captive members continuously focus on improving workplace safety and controlling losses, they can lower their premiums over time.

Group Captive Fast Fact No. 2

Click here to download the Insurance Information Institute’s White Paper — A Comprehensive Evaluation of the Member-Owned Group Captive Option.

Group Captive Fast Fact No. 3:

Brokers play an integral role in our group captive process. Captive Resources works closely with insurance brokers to support member-companies throughout the various stages of group captive ownership. Our broker partners play an essential role in the beginning stages by helping determine if group captive insurance is a good fit for their client’s business. Once a company joins a group captive, the broker, and our team at Captive Resources, continually work with the member to ensure it gets the most out of its captive membership through ongoing evaluation, regular risk assessments, immersive workshops, continuing education, and more.

Group Captive Fast Fact No. 3

If you are an insurance broker interested in partnering with Captive Resources, please contact us to learn more.

Group Captive Fast Fact No. 4:

Captive Resources’ member-owned group captive model works well for companies from an array of industries and of various sizes. The companies that find the most success in our model do share some common attributes, both in terms of their approach to insurance and their business profiles. One fundamental trait that the most successful group captive members share is a commitment to risk management and safety. Our group captive model attracts best-in-class, safety-conscious companies and helps them get more out of their insurance programs.

Group Captive Fast Fact No. 4

Check out this infographic to find out if your company could be a good fit for group captives.

Group Captive Fast Fact No. 5:

As equal stakeholders, member-insureds play a principal role in the direction of the group captives that we support. As a consultant, Captive Resources provides guidance and expertise, but member-companies are the ultimate decision-makers. Each group captive utilizes a committee structure with active participation among members. Committees are comprised entirely of members and oversee critical captive functions like financial performanceunderwriting, and risk control. Committees bring their recommendations to the entire Board for consideration and voting.

Group Captive Fast Fact No. 5

Group Captive Fast Fact No. 6

Our casualty group captive model focuses on lines of coverage that produce frequent and predictable losses that member-companies can significantly impact through targeted risk control and safety but also incorporates protection for large losses. Workers’ compensation, general liability, and commercial auto are typical and are also coverages that are required by a majority of companies, while other ancillary coverages are more company-specific.

Group Captive Fast Fact No. 6

Group Captive Fast Fact No. 7

Our group captive model has several aspects that help members feel comfortable with the model and sharing risk with other companies. Beyond recruiting best-in-class risks, the captives we advise include different types of protection for the captive and its member-owners:

  • The captive assumes risk in the smaller, more predictable loss layer. A strong reinsurance company insures catastrophic losses, so the risk is level and manageable.
  • Should a member’s actual losses exceed actuarial projections, a provision for assessment is built in to help ensure adequate funding. Assessments are limited, however, so members always know their expected maximum amount upfront.
  • Member-companies provide collateral upon joining the captive which accomplishes multiple objectives: it helps to fund/capitalize the captive, collateralizes the policy issuing/fronting carrier, and secures member-to-member obligations (e.g., bad debt).
  • Regular ongoing risk control assessments, safety evaluations, and remediation ensure all members stay on track and meet the captive’s risk management expectations.

Group Captive Fast Fact No. 8

The group captives we work with require a variety of expertise and support to operate efficiently and effectively. The captives have virtually all the same major functional areas of a traditional insurance company, but they don’t have employees. To fulfill those responsibilities, services like policy issuance, claims administration, loss prevention, and financial auditing are outsourced. By “unbundling” the services, the captive can make adjustments to its services more easily with less disruption and lower cost.

Group Captive Fast Fact No. 8

Group Captive Fast Fact No. 9

Our group captive model provides member-company insureds a framework for controlling claims costs by allowing them to play an increased role in their insurance program, including proactive involvement in supporting TPAs in the claims management process. The group captives we work with also help control claims costs by providing members additional claims advocacy and support to improve claims adjusting effectiveness and efficiency.

Group Captive Fast Fact No. 9

Interested in learning more about group captives? Click here to download a copy of the Insurance Information Institute Executive Brief.

Be sure to keep an eye out for a new fast fact series, which will focus on our Medical Stop Loss group captive model.

If you have any questions about group captive insurance, please contact our team. We are always here as a resource to you!

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