Advantages of Group Captive Insurance

When it comes to running a successful business, there are many responsibilities and decisions that need to be made. One big decision most business owners find themselves facing is what to do about insurance, especially in the property and casualty spheres. After all, with the cost of medical procedures, general wellness, and risk protection being so high, it's no wonder this can be a deal breaker for a company. Therefore, it’s an important topic to be sure of.

Thankfully, if your business is a good candidate for group captive insurance, this will likely be the most advantageous option and provide you with many benefits when compared with traditional insurance options. Read on to learn more about group captive insurance and what it can provide your business:

Curious to Know if Your Company Might  Be a Good Candidate for a Captive?

What is Group Captive Insurance?

Group captive insurance is so named because businesses actually create a business structure through which insurance is provided. The business being created to offer this insurance is subsidiary to the parent company, meaning they are “captive,” hence the name. The subsidiary’s entire role is to insure the risk of the companies and the related parties who own them. They look much like other insurance companies, though, other than the way they are formed.

Another way to explain this type of insurance is multiple businesses owning one insurance subsidiary. The parent businesses or those who come together to form a captive insurance company are non-related entities (they don’t have to be but can be in the same field), yet they own and control the insurance subsidiary together.

What Are The Benefits of Group Captive Insurance?

As with any type of insurance, you want to know exactly how a specific policy can benefit your business. This makes sense. Thankfully, there are many advantages and overall benefits related to group captive insurance, a few of which are explained below:

Greater Control

With a group captive insurance plan, you as a business will have more control over your insurance coverage overall. You can negotiate coverage terms and offer specialized protections. This is especially true when considering homogenous group captives, meaning they are made up of businesses either in the exact same or similar fields.

Business-Specific Premiums

The premiums assessed for group captive insurance plans are based on a business's particular risk profile and claim history. This differs from traditional commercial insurance plans which are usually largely influenced by industry trends. Limiting premium calculations to an individual business’s profile and history is a much fairer way to set the price. It also protects businesses from undue market trends that only tend to raise rates.

Cost Reduction

Another benefit of a group captive insurance setup is the fact that you as a business can better control your total costs of risk and risk financing. The total cost of risk is decreased when a business reduces the number of claims since premiums are largely based on claims and subsidiaries’ remaining profits from unpaid premiums. Consequently, risk financing is more manageable with group captive insurance because the insurance itself is so customizable.

Heightened Safety

The financial incentive to reduce rates causes businesses to have a heightened awareness of safety. One survey even found that companies with captive insurance plans experienced 48% fewer fatalities and 22% fewer worker’s compensation claims when compared to companies with traditional insurance plans. In other words, you as an employer and your employees will benefit from a reduced accident rate, which is encouraged by captive plans.


Owning and operating your own subsidiary will give your business complete transparency in how insurance premiums are managed. Premiums, overhead, claims payments and the like are all readily available for businesses to review at any time.

Increased Profits

Last, but certainly not least, businesses can benefit from group captive insurance by underwriting profits through the investment income that the subsidiary generates. This combined with the cost savings they will enjoy makes captive insurance plans quite financially beneficial for many businesses.

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How to Know if Group Captive is Right For Your Business?

Determining if a business is a good fit for group captive insurance is something that must be addressed on a case-by-case basis and take into account a business’s risk profile, coverage, and premium needs. However, some general factors make businesses good candidates for this type of insurance coverage. They are as follows:

  • You currently pay a combined amount of at least $125,000 for property and casualty insurance premiums, which can include commercial auto, general liability, and workers’ compensation premiums.

  • You want to reduce your overall insurance costs and would like to better manage your risk finances.

  • You would like your insurance premiums to be based on actual losses you have experienced rather than industry averages. If your company has experienced lower than industry average loss, this is especially important.

  • Your business has at least a five-year loss history of incurred claims that were consistently below 50% of the premiums paid.

  • You are committed to being proactive in your safety measures, which will improve your overall safety record and reduce the occurrence of accidents at your business.

To sum up, if your business is financially stable and you find yourself consistently paying high insurance premiums when considering your claims, you need to at least consider if group captive insurance could be a good move for your brand. The evaluation process to determine your benefit from this type of protection can be extensive and complex. Therefore, it’s important to seek the help of a highly experienced insurance professional who understands captives well to make a proper evaluation. It’s also important to consider the move to group captive insurance as one that is long-term as you can’t simply change insurance companies once this setup has been completed. When you meet with a professional consultant, they can take a good look at your business and help you make an informed decision about how best to insure your business.

Typical Group Captive Insurance Coverages

While your coverages will vary, the following are some aspects that are usually part of captive plans:

  • General Liability Coverage: This protects you against slip and fall accidents, false advertising claims, and defamation lawsuits.

  • Auto Physical and Liability Coverage: This provides protection against vehicle accidents, where employees are drivers and cause injuries or property damage as well as addressing the physical damage to the vehicle.

  • Workers’ Compensation Coverage: This relates to all workplace injuries and illnesses that an employee might sustain on the job.

Group Captive Insurance Can be Beneficial

If you think your business might be a good fit for group property and casualty captive insurance, take the online assessment at Winter-Dent. Our assessment will provide an initial evaluation and explain how group captives could benefit your business. Contact us today to learn more.

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