By now, you have probably heard of Group Captives and perhaps intuitively conclude it is just a new “flavor of the month”. The first captives were, in fact, birthed in Europe in the 1920’s and they began to gain momentum here in the United States in the early 1970’s with healthcare and energy industries seeking out predictable insurance and risk financing outcomes. Control, predictability, and cost savings are not terms typically associated with insurance, but these can all be captured with proven methods through a group captive.
Savvy and sophisticated employers find, despite their own disciplined efforts toward controlling frequency and severity of claims, insurance premiums continue to rise. What many find frustrating is often studies or industry reports are shared to support the insurance companies pricing posture, all the while what is really happening is; Top of the Class performers are subsidizing the middle and lower tier performers to help offset the insurers myopic or arguably even poor underwriting discipline.
Group Captives are not for everyone and there are built in barriers of entry, but if you find alignment with a Group Captive the consistent and predictable outcomes can be meaningful. Group Captives are formed and managed by captive members for the benefit of the members while acting as their own insurance company. Captive members can calculate, and remit premiums based on their (own and actual) loss history rather than trends in the market supported by reports already mentioned. Strength in numbers from Top of Class performers creates collective buying power, better results and cultivates genuine partnerships with reinsurance providers, claims administration, loss prevention companies, all resulting in enhanced control and lower costs benefiting all stakeholder outcomes.
Some of the benefits that may be found in a group captive:
Fraternal Focus. Group Captive members are industry leaders, peers and rainmakers with a laser focus on best-in-class management practices and performance. This member only group may submit that it is “By the Best and For the Best”.
Member Controlled. Unlike traditional insurance, members enjoy a seat at the table and can influence the direction of the Captive. All members have an equal vote helping to streamline members participation.
Claims Management. Through the IMCG division, Concierge Claims Management works in concert with the captive claims administrator delivering enhanced control and advocacy. This approach ensures that sound financial decisions are made throughout the claims process. All the while, members enjoy a seat at the table.
It Is Your Money. Captive members do retain their unused loss funds and investment income is captured with these funds. Naturally, this is contrary to traditional insurance companies who control your unused loss funds and realize the corresponding benefits of this control. So, yes members can and do originate investment income and insurance premiums may be deductible. Please consult with your tax advisor, if considering a captive for you.
Group captives are not the answer for many organizations. Members must qualify based on established and proven criteria focused on claim control, stability, financial endurance, and a steadfast commitment toward maintaining and excelling as a top of class performer. But, if you are looking for control and predictability over long-term insurance and risk financing costs, then perhaps now is the time to evaluate the benefits of enjoying a seat at this member’s only captive table.
Insurance Management Consultancy Group is an entrepreneurial centric insurance brokerage delivering exceptional value to the constituencies we are privileged to serve. IMCG partners have been serving multi-discipline interests for over fifty years and are honored to contribute toward protecting stakeholder value and family legacies. We look toward growing together.