Group Captives: An Opportunity to Lower the Cost of Risk

Participation in a group captive can help companies save on insurance costs and provide access to extensive risk management resources, including industry-specific expertise.

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Joining a group captive often results in a reduced insurance premium. This is due to the fact that, in a group captive, each member's premium is based on its own most recent five-year loss history. Group captives recruit safety-conscious companies with better-than-average loss experience.

This contrasts with commercial carriers, which base premium on a number of factors including industry-wide loss experience, statutory requirements and overall portfolio performance. This more expansive risk pool can result in higher premiums than a lower-risk company may obtain as a group captive member.

By the second and third year of membership, the increased focus on holistic risk management and post-loss claims management can drive members' premiums down even further. According to a recent study, almost three quarters of new bound policies in group captives resulted in lower premiums compared with members' previous plans. Many members enjoyed significant savings, with roughly 30% of new policies producing savings of 20% to 30% or more.

To read the full report from which this is excerpted, click here.

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The Insurance Information Institute

Since 1960, the Insurance Information Institute has been the trusted source of unique, data-driven insights on insurance to inform and empower customers. Triple-I, which became affiliated with The Institutes in 2020, serves customers, media and professionals seeking insurance information.


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