When I say “captive,” what comes to mind? Confinement…closed spaces…pirates with wooden legs? What if I say “group captive?” Maybe Cayman Islands…tax advantages…insurance alternative? Like many things in life, there are truths and myths when it comes to group captive insurance. Sure, many captives are domiciled off shore. And yes, there are some tax advantages. But no one would join a group captive just for those reasons.

For those business owners insured through a group captive, I imagine they would use words like “control,” “stability,” or “commitment.” Group captive insurance programs are unbundled, meaning all services like fronting and reinsurance, claims management, and loss control support are purchased separately. This control creates transparency in where your dollars are spent and responsiveness of your professional partners. As a captive owner, you are involved in the claims process — collaborating with your claims professionals together working towards positive results. They understand it’s your money at risk.

Businesses engaged in a group captive are insulated from the hard and soft insurance market swings, improve performance, and see rate decreases over time. Why do they see the stability in rates? It’s simple — there is skin in the game. While the structure of members taking a large retention is a factor, the driving force is the realization the captive and its members are on the hook to pay claims. This challenges members to commit to safety and loss control. Members focus on what can be done to make their business safer to operate — eliminating or minimizing hazards, getting injured employees back to work, and transferring liability where feasible. The commitment to safety doesn’t stop with internal reflection. Group captive members are also committed to each other. Members continuously work together sharing ideas, resources, and lessons learned helping one another become a best-in-class operation. At the end of the day, the group captive is like a family. And yes, sometimes, a family who goes on vacations to desert islands.

If you’re interested in learning more about group captives, feel free to reach out with questions. We’ll also be hosting an event on June 26 in Denver. Check it out. And, again, don’t hesitate to call or send an email. We’d love to talk with you about captives, answer any questions you may have, and see if it’s the right fit for you!