Captives

Helping clients with alternative risk strategies

The insurance market has hardened in recent years, making it difficult for companies to find affordable insurance. One solution that many companies have turned to is to utilize a captive insurance company.

A “captive” is an insurance company that is wholly owned by its parent company. Captive insurance companies are created to insure the risks of their parent company or a group of related companies and are not licensed to insure the risks of other entities.

The benefits of captive insurance

Captives are often used for standard risks that traditional insurers are unwilling to cover or for coverage that is unavailable from commercial insurers. The main purpose of forming a captive is to gain better control over the cost and coverage of commercial insurance. Other potential benefits of captive insurance include:

Lowering the overall cost of risk
The ability to customize coverage to meet the specific needs of the parent company
The ability to control the claims process
Increased profitability

Partner with a captive leader

The Risk Strategies Captives Practice includes seasoned professionals from our divisions, Oxford Risk Management Group and Risk Management Advisors. We are specialists in the design, implementation, and management of all types of captive insurance companies.

Our practice is ranked #5 by Business Insurance on their 2023 Top Captives Manager list. This reflects our dedication to being a world-class partner to sophisticated mid-market companies. We are committed to building a relevant suite of products and services in this fast-changing environment to better serve our clients.

Whether you are considering an alternative risk solution, or need help managing an existing captive, our team of specialists will provide the highest degree of expertise in the captive industry today. Recognizing the needs of our diverse client base, we have the safeguards in place to run our Captives Practice independently from other Risk Strategies companies. Unhindered by geographic limitations or industry focus, we seek out the best insurance solutions to meet the unique needs of your business.

FAQs

There are many different types of captive insurance companies, namely single-parent captives and group captives.

A single-parent captive is an insurance company that is set up to insure one business or a series of related businesses. The main advantages of a single-parent captive are that the business owner has complete control over the company, and the company can be tailored to meet the specific needs of the business. Another advantage is that the captive can be used to provide coverage for risks that are not insurable in the commercial market.

Group captives are owned by a group of companies that share the same risks. The group captive model has been around for decades, but it has seen a resurgence in popularity in recent years. There are several reasons for this, including the fact that group captives can provide significant cost savings and risk reduction for their member companies. In addition, group captives can be customized to meet the specific needs of the member companies, which gives them a level of flexibility that traditional insurance companies cannot match.

Large deductible programs
General liability
Workers' compensation
Extended warranty
Business
Environmental
Medical malpractice
Employee benefits including
medical stop-loss

Supply chain interruption
Auto liability
Legal expenses
Reputational risk and cyber liability
Directors and officers
Property damage loss waiver
Tenant damage waiver

Mid-market business owners who can control their company’s risk performance and outcomes are prime candidates for captives. They are usually best-in-class in their market or industry and have the systems and processes in place to outperform others. Some of the insurance challenges they face include:

Hard markets, including rising insurance premiums, increasing deductible limits, new policy exclusions, imposition of sub-limit caps, and carrier non-renewal
Lack of customizable coverages in the commercial marketplace, including legislative/regulatory changes, administrative actions, and business interruptions
Existing captives that need assistance with basic organizational, administrative, and financial management to stay in compliance with regulatory requirements
Rising costs of employee benefits, administration, and compliance with insurance programs