Group captives: An opportunity to lower cost of risk

Participation in a group captive can help companies save on insurance costs and provide access to extensive risk- management resources, including industry-specific expertise. These attributes are a source of value in the best of times, and today’s inflationary conditions may increase their appeal for certain types of companies.

A captive is generally defined as an insurance company that is wholly owned and controlled by its insureds to cover its owners’ risks. It’s not the same as a mutual insurer, despite a mutual being technically owned by its policyholders. In a mutual, the policyholder has not invested any assets in the insurer and does not actively participate in running it.

A group captive is most commonly owned by a collection of organizations, rather than a single parent company. Typically, each owner makes a modest initial capital contribution. The lines of coverage written usually are those with more predictable losses, such as workers compensation, general liability, and automobile liability and physical damage.

See also video below with the Executive Exchange: Triple-I and Captive Resources.