The Captive Wave: Why Business Owners Are Shifting Away From Traditional Insurance

Ten years ago, the words “group captive” didn’t mean much to most business owners. If they had heard them at all, the concept usually raised more questions than answers. Fast forward to today, and many business owners are proactively asking their brokers to explore this strategy for their insurance program.

Why the shift? Like most industries, the Employee Benefits Group Captive and Property Casualty Group Captive models have evolved. Pair that with a hard commercial insurance market—where premiums have risen steadily over the last five-plus years and you have the perfect storm for what I call the “captive wave.”

The captive wave refers to the momentum created by business owners moving into a group captive strategy for their insurance programs. In fact, EY’s 2024 Global Insurance Outlook reports that “captives now represent nearly 25% of the overall commercial insurance market, having diverted hundreds of billions of dollars in premiums from traditional channels in the last decade.” Despite this massive migration, many businesses still haven’t taken advantage of the model. But for the right companies, the captive wave is far from over.

What Is a Group Captive?

A group captive is a private insurance company owned by a group of like-minded business owners. Instead of paying premiums to a traditional insurer, members pay premiums into their captive and, over time, share in the underwriting profit and investment income it generates.

In short: it’s taking the same model that’s made large insurance carriers successful and applying it for the benefit of business owners.

Why Consider a Group Captive?

A group captive strategy applies the same risk vs. reward mindset that drives business decisions every day. Just as businesses take risks to earn greater rewards, joining a group captive means that if you consistently outperform the market, you’re entitled to the profit your strong performance generates.

Doing Business: The Old Way vs. The Bold Way

In a traditional insurance model, you rent your insurance, hope for a favorable renewal, and let the insurance company call the shots. In a group captive, you own your insurance, control your claims, and get rewarded for safety through premium returns—all while partnering with companies that think like you.

Is a Group Captive Right for You?

Group captives aren’t the right fit for every business. But if your company consistently has fewer claims than premiums paid, evaluating this strategy is well worth your time. For the right businesses, captives deliver:

• Financial opportunity through premium returns and investment income
• Stability by insulating your premiums from market volatility
• Control over how your insurance company is run

Take the Bold Step

If you’re tired of doing business the old way and ready to explore the bold way of insurance, ICS can help. Our team has helped hundreds of business owners through the evaluation process and into successful captive programs.

Contact me or any member of the ICS team today to find out if a group captive is the right move for your business.