Being a Groupie Can Be Smart Business

2013 Captive Trends

It’s likely you spend a great deal of time and money differentiating your business from your competition. The strongest 2013 trend in risk management may seem counter intuitive to this business principle. Many middle market companies are joining groups – group insurance captives as an alternative way to manage risk.

According to Artex Risk Solutions, group captive participation in 2012 alone was estimated at $1.3 – $1.5 billion in premiums, representing an estimated $200 million of new growth. 2013 numbers are on track to far exceed the previous year.

Captive insurance, previously the domain of large multinational companies, has become increasingly accessible to middle market companies through the formation of group captives. Group captives are formations of several companies that come together to become owners of a captive that provides Workers’ Compensation, General Liability, and Auto Liability coverage

Initially, middle market companies have been led to implement group captives as traditional carriers increase rates and restrict coverage terms.  Emerging uses for group captives are now a driving force as well, particularly with the implementation of the Affordable Care Act (ACA). Group captives are being used to provide medical stop loss coverage for employer health care plans.

My colleagues at Artex Insurance Solutions cite a recent membership study by the Captive Insurance Companies Association (CICA) that showed 25% of respondents are likely to place medical stop loss coverage in their captive in the next three years. Again, the use of a group captive provides middle market companies the accessibility to stop loss coverage by providing the advantage of group leveraging power.

I am available at any time to answer any questions you have about how a captive insurance program can work for your company.  You can contact me here.


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