Part 1: Are We a Fit for a Group Captive?
The $125,000 Question
You're staring at another workers' comp renewal. The premium went up again. Your mod is climbing despite your best safety efforts. And you're wondering: Is there a better way?
For many established businesses, the answer is yes—but only if you meet specific criteria. A property and casualty group captive isn't for everyone, and that's actually a good thing. The businesses that do qualify often see significant long-term advantages: cost reduction, customized coverage, transparency, and financial rewards for being proactive about safety.
Before you dive into feasibility studies or captive assessments, you need to answer one fundamental question: Are we even in the ballpark?
This quick pre-check will tell you in about five minutes.
What Makes a "Good Fit" for a Group Captive?
Based on decades of captive program data, businesses that thrive in group captives share five common characteristics:
1. Combined P&C Premiums of at Least $125,000
This includes your workers' compensation, general liability, and commercial auto premiums combined. Group captives work by pooling risk across multiple businesses, making the economics viable at lower premium thresholds than single-parent captives (which typically require $1 million+ in premiums).
If you're below $125,000, traditional commercial insurance is probably still your best option. If you're at or above that threshold, keep reading.
2. Your Losses Are Below Industry Averages
Here's the key insight: traditional insurance prices you partly on what other companies in your industry are experiencing. If you run a safer-than-average operation, you're essentially subsidizing your competitors' claims.
Group captive premiums are based on your actual loss experience, not industry trends. If your business consistently performs better than your industry peers, a captive rewards that performance financially.
3. Five-Year Loss History with ≤50% Loss Ratio
This is the clearest objective measure. Look at the last five years of your workers' comp, general liability, and auto coverage. Add up all the premiums you paid. Add up all the incurred losses (paid claims plus reserves). Divide losses by premiums.
If that ratio is consistently at or below 50%, you're funding an insurance company's profits and overhead. In a captive structure, those dollars stay within your organization—either as reserves, investment income, or eventual profit distributions.
4. Commitment to Proactive Safety Measures
A captive isn't a place to hide poor safety performance. It's a structure that rewards businesses that invest in loss prevention. Companies with captives experience 48% fewer fatalities and 22% fewer workers' compensation claims compared to their traditionally insured counterparts.
Why? Because when you own part of the insurance company, every claim directly impacts your bottom line. That financial alignment creates powerful incentives to improve safety culture, implement better training, and address hazards before they become claims.
If your organization is serious about safety and willing to make it a continuous priority, that's a green flag for captive membership.
5. Long-Term Perspective
Joining a group captive isn't like switching insurance carriers. You're becoming a part-owner of an insurance subsidiary, and you should view it as a multi-year strategic decision. Entering and exiting a captive is more complex than simply changing policies.
The businesses that benefit most are those looking for a sustainable, long-term alternative to the traditional insurance market—not a short-term premium fix.
The 5-Minute Data Gathering Checklist
If those five criteria sound like your business, here's what you need to pull together for a preliminary assessment:
- Five years of loss runs (workers' comp, GL, and auto)
Detailed claim-by-claim history showing incurred losses, paid amounts, and reserves. - Current experience modification rate (mod)
Your workers' comp mod tells a story about your loss history relative to your industry. A mod below 1.0 is a strong positive indicator. - Payroll breakdown by workers' comp class code
Different job classifications carry different risk levels. Understanding your exposure distribution is critical. - OSHA logs (past 3–5 years)
OSHA 300 logs document recordable injuries and illnesses. They provide a window into your safety culture and trending. - Current premium breakdown
What are you paying now for workers' comp, GL, and auto? How has that trended over the past few years? - Description of your safety program
What formal safety initiatives, training programs, and risk management practices do you have in place?
If you can gather these documents in one sitting, you're ready for the next step.
What Happens After You Pass the Pre-Check?
Once you've confirmed you meet the basic fit criteria, the next step is straightforward:
#1 Take the Online Assessment
Winter-Dent offers a structured assessment tool that provides an initial evaluation based on your preliminary data. Our assessment will give you a clearer picture of whether a group captive is worth pursuing for your specific situation.
#2 Winter-Dent Advisor
After completing the assessment, we'll use that information to help you walk through all the details that must be taken into account. When you meet with one of our advisors, we'll take a comprehensive look at your business to understand its unique risk profile and insurance needs. Our team has the expertise necessary to help you make an informed decision about how to best insure your business.
Why This Matters: Control, Transparency, and Alignment
Traditional insurance treats you as a policyholder. A captive treats you as an owner.
That shift in relationship creates fundamentally different economics. You gain:
- Greater control over coverages tailored to your actual risks
- Business-specific premiums based on your performance, not industry averages
- Cost reduction through better risk financing and elimination of insurer profit margins you don't benefit from
- Transparency into how every premium dollar is spent
- Profit potential from underwriting gains and investment income
- Safety incentives that directly improve your workplace culture
But those advantages only materialize if you're a good candidate in the first place.
Take the First Step
If you're paying at least $125,000 in combined P&C premiums, running a safer-than-average operation, maintaining a loss ratio at or below 50%, and committed to long-term safety improvement, you owe it to your business to explore whether a group captive makes sense.
The worst-case scenario? You spend five minutes gathering data and learn that traditional insurance is still your best path forward. The best-case scenario? You discover a structure that could save your business hundreds of thousands of dollars over the next decade while improving safety and giving you control you never had before.
Ready to find out where you stand? Start the online assessment
Want to go deeper first? Download the complete guide: Putting a Property and Casualty Group Captive to Work for Your Business.