Group Captive Insurance 101

By Sean Flavin October 27th, 2021

There are a lot of educational resources available when it comes to captive insurance, which as a concept has been around for more than a century. But much of that content revolves around single-parent captives, which are typically better suited to large, multi-national corporations. Meanwhile, far fewer educational resources are dedicated to the member-owned group captive model, which has made captive insurance — and the benefits that come with it — available to a much broader range of companies.

As the premier consultant to member-owned group captives, we have a unique and acute understanding of captive insurance, especially as it pertains to mid-market companies. Our founders launched the first heterogeneous member-owned group captive in the 1980s with nine companies and about $1.5 million in premium. We’ve been working on developing and growing the model ever since. Today, we consult to more than 5,400 companies with roughly $3 billion in premium.

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Member-owned group captives are an excellent option for entrepreneurial, safety-conscious companies looking to seize control of their insurance programs. Even with all the growth in the industry, we know there are a lot of companies fitting that description that are unaware of the member-owned group captive model and what it can deliver. We've seen first-hand the benefits that group captive insurance delivers — benefits like reduced insurance costs, increased safety performance, and dividends earned thanks to that improved performance.

Against this backdrop, we launched our Group Captive Insurance 101 series (or Group Captives 101 as we sometimes call it) to answer some of the most frequently asked questions we hear. Below is a collection of all the articles in the series. If you have a question about member-owned group captives that isn't covered below, contact us today to speak to one of our captive insurance experts.

Note on Group Captive Insurance 101:

These articles include descriptions of captive insurance companies with various levels of specificity. Unless otherwise noted, we speak to the structure and operating procedure of the member-owned group captives we support. There are several ways to structure a captive insurance company, so it’s important to note that these descriptions do not necessarily apply to all captives.

What is a Captive Insurance Company?

In our inaugural article, we offered a 10,000-foot view of the captive insurance concept. We defined “captive insurance” and looked at what kind of captive insurance companies exist. We also briefly described member-owned group captives, which are the type of captives we support.  

What is a Group Captive?

In the second installment of our Group Captive Insurance 101 series, we moved past the general concept of captive insurance to look specifically at the group captive model and how it opened the door to captive ownership for small- and mid-sized companies. 

How Does a Captive Insurance Program Work?

With the general concepts covered, we explored the inner workings of a group captive insurance program in our third installment. In this post, we looked at two fundamental components of the group captives that we work with:

  • The risk-reward loss-funding formula that's integral to how the captives finance risk and distribute dividends.
  • The structure of the captive programs and the major participants that are involved.

Why Form a Captive Insurance Company?

While there are myriad reasons why a group of companies would form a captive insurance company, we focused on three of the most significant motivations:

  • Greater Control Over Costs
  • Increased Control Over Insurance Program
  • Greater Emphasis on Risk Management

Self-Insurance vs. Group Captives

We often get asked about the difference between group captives and self-insurance. It’s a logical question as the two are actually very similar — in fact, group captive insurance is a form of self-insurance. But there are also significant differences. In this post, we explored the similarities and differences between self-insurance programs and member-owned group captives.

Want to Learn More?

We’ll continue to update this page as we add the answers to more topics to our Group Captive Insurance 101 series. In the meantime, click the button below to subscribe to Captive Resources and have the latest news and insights in the group captive industry delivered straight to your inbox.

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