A Group Captive is a vehicle through which a group of insureds can reduce their insurance costs by sharing risk within a specific retention. A Group Captive can be homogeneous (all of the same industry/class) or heterogeneous (of different industries/classes).
A Group Captive offers several benefits to both to the individual member (insured) and to the collective group:
- A risk sharing alternative for insureds that may not be eligible for a Self-Insured Retention (SIR) or deductible program;
- Greater purchasing power when the collection of insureds is aggregated;
- Aggregation of exposure and experience offers greater credibility which in term results in higher confidence in predicting future experience of the group;
- Stability in premiums since they are based on the group’s performance and not on market conditions;
- Reduced loss costs are a strategic objective and encourages the group to collaborate to develop and implement loss prevention and safety best practices; and
- The opportunity to earn underwriting and investment income not available with a traditional insurance purchase.
Group captive retentions generally range from $250,000-500,000 on a per-occurrence basis and also are structured with a captive aggregate stop loss attachment. Some group captives also provide basket and clash coverage. This coverage limits the retention to one occurrence when multiple coverages are triggered and will also provide similar protection when two different insured’s in the captive share an occurrence.
What type of insured is a good candidate for a Group Captive?
- Combined lines premium between $200,000 and $1 million (generally those that are too small to support a single captive on their own)
- Solid financial standing and business track record of at least five years
- Operations with a consistent or improved loss history over time
- Management that values loss prevention and safety
- Actively engaged in claims management
- Committed to actions that lower the cost of risk over time
Unique offerings for Group Captives with Great American Alternative Markets
- We specialize in working with agents to create unique proprietary group captives
- Flexibility in designing risk-sharing and expense structures
- Ability to support WC, GL and Auto risks in all 50 states
- Sponsored Cell option that avoids costly capitalization, legal, actuarial and licensing fees, and pre-negotiated competitive captive management fees
- Guaranteed interest rates on loss funds and cash collateral option
- Fair and reasonable commutation terms
- Bundled or unbundled (TPAs) claims services
- Some groups are open to new prospects
Do you have a client that is ready to share risk? Contact us today to learn more.