History

Captive insurance companies are often referred to as being part of the “alternative risk market.” Further, member-owned, group captives are usually depicted as a niche within that market.

The terms “alternative” and “niche,” however, may be misleading. To begin with, the alternative risk market now accounts for more than 50 percent of commercial insurance premiums in the United States according to A.M. Best.

Initially the growth in the captive insurance marketplace was derived from Fortune 500 type companies forming single-parent captives. From this perspective, the number of such companies is clearly limited; thus, much of the ensuing growth has come from mid-sized companies electing to move from the traditional insurance market.

Group captives are now the fastest-growing segment in the alternative risk market. Group captives have continued to evolve to the point where this form of risk management is now accessible to a range of mid-sized companies that have proven the ability to manage their claims.

Control

Member-owned, group captives are not for everyone. Those companies, regardless of industry, which understand the importance and value of risk management and loss control, and who genuinely want to take control of their insurance destiny, are ideal candidates for this type of captive arrangement.

As a member of a group captive, the member is also an owner/shareholder of the captive. The members collectively control the operations of the captive through the selection of the reinsurer, the policy issuing carrier, and the third-party claims administrator (TPA).

In addition, member/owners determine the admission of new members to the captive program based on criteria that include a firm’s commitment to safety, its financial stability and its historical loss experience.

Financial Reward

The owners of a member-owned group captive utilize a premium funding system that provides a total transparency of cost with regard to operations, loss funding, premiums and risk control.

Insurance consumers want their costs to accurately reflect their risk. Such knowledge in tandem with best practices truly empowers group captive member/owners to direct their companies more efficiently, which effectively works toward consistent reduction of their total cost of risk. The ultimate outcome is the building of equity and the lowering of cost – transforming insurance expense into a financial reward.

Stoltz and Company

Our firm has been at the forefront of the member-owned group captive work in Texas and throughout the southwest region. We represent the largest member-owned captive consultant in the world – manager of a range of captives totaling more than 2,000 members and nearly $1 billion in annual premiums.

Qualification begins with a confidential meeting to discuss how a captive could work for your business, as well as the conditions of membership and application process.