Turning Safety into Savings: Earning Dividends through Group Captive Insurance

For best-in-class companies seeking to take control of their insurance costs while fostering a culture of safety, group captive insurance offers a compelling alternative. Unlike traditional insurance, where the insurance carrier retains underwriting profits, member-owned group captives reward companies for improving workplace safety and minimizing claims costs, with the potential to earn dividends from unused loss funds.

The Link Between Safety and Dividends

In the group captives supported by Captive Resources, safety isn’t just a compliance checkbox; it’s a core principle that successful members thoroughly embrace. And, since group captives are owned and operated by the companies they insure, members are directly rewarded for maintaining best-in-class safety standards and minimizing claims costs. Those rewards come in several forms, including healthier and more productive workforces, lower premium costs, and dividend potential.

Here’s how safety can lead to dividends in the captives we support:

Member Loss Funds

Members’ premiums are based on an actuarial analysis of each company’s five-year loss history. After accounting for operational costs, premium dollars are allocated into two loss funds:

• The A Fund: provides for frequency losses (e.g., $0 to $100,000)
• The B Fund: provides for severity losses (e.g., $100,001 to $500,000)

Investment Growth

The captives invest those dollars in an exclusive mutual fund to earn investment income until the funds are needed to pay out claims.

Dividend Distribution

Due to the long-tail nature of certain claims, captives typically wait three to five years to close out underwriting years. Once the underwriting year is closed, members earn back any unused loss funds, plus investment income, reflecting their success in prioritizing safety and managing risk effectively. 

Over the years, this model has yielded exceptional results for members. But it only works if members embrace a safety-driven culture and minimize claims. And that’s where the approach of the group captives we support comes into play — the captives strive to bring in best-in-class, safety-conscious companies and then provide them with the resources to take their risk control practices from good to great.

Proven Results: The Power of Safer Operations

Group captives consistently deliver measurable results by promoting safer workplace practices and reducing insurance costs. Real-world data shows how members have leveraged the captives’ safety resources to consistently and substantially outperform industry standards.

An independent actuarial analysis of 15 mature group captives, representing 1.5 billion work hours, found:

• Members had 48% fewer fatalities than industry standards, equating to 20 lives saved.
• Members had 39% fewer lost-time claims than industry standards, resulting in an estimated $153 million in savings.
• Members had 22% fewer total workers’ compensation claims compared to industry standards, a reduction of 5,568 claims.

“When we focus on keeping people safe, we not only protect lives — we control losses and unlock long-term reward for our members and their employees,” said Dave Netti, SVP and Director of Risk Services at Captive Resources.

The Long-Term Reward of Safety

This safety-driven approach to minimizing claims and maximizing savings has yielded exceptional results. In fact, a separate comprehensive study of 15 mature group captives over 233 closed accident years revealed:

• Members contributed $5.6 billion into loss funds and earned back $1.3 billion in dividends, 23% of what member-companies contributed to loss funds.  
• Dividends were earned in 98% of accident years.
• In 71% of years, dividends exceeded 15%; in 58% of years, they surpassed 20%.

While these outcomes highlight the tangible benefits of participating in a group captive, the numbers only tell part of the story. The following case studies offer a closer look at how two companies translated their group captive memberships into significant cost savings.

Industrial Contractor Slashes Insurance Costs through Casualty and MSL Group Captive Memberships

A fifth-generation contractor dramatically reduced insurance expenses by joining both a Casualty and Medical Stop Loss group captive. On the casualty side, the company collaborated with other safety-focused, high-performing companies through risk control workshops and board meetings to help refine its risk management strategy. As a result, the company has earned nearly $1.1 million in dividends, plus investment income, while improving operational efficiency and sharpening its competitive edge. Explore the case study.

Contractor Receives Lower Rates Reflecting Its Strong Loss History

By tapping into the risk management resources offered through the group captive model, this contractor strengthened an already robust safety program, boosting its Risk Control Assessment score into the top 10% of all members in the captive. Thanks to their enhanced safety performance and the member-owned structure of the captive, the company has built $2.1 million in owner equity and earned over $623,000 in dividends since joining. Together, these returns represent nearly one-third of the total premium dollars the company has paid into the captive. Explore the case study.

Prioritizing Safety is a Strategic Investment

Investing in safety transcends moral responsibility; it’s a strategic move that enhances profitability. The National Safety Council reports that for every $1 invested in workplace safety, businesses see a return of $4 to $6, a clear indication that safety is not just a cost center, but a profit driver.

Captive Resources' group captive model provides a framework where safety and financial performance go hand in hand. By taking control of their insurance programs and committing to continuous improvement, member-companies can transform safety initiatives into significant savings and dividends.