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.
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