A captive insurance company is a subsidiary created by a parent company to insure its own risks, offering more control and potential cost savings compared to traditional insurance, which involves third-party insurers. Members can help set underwriting guidelines, have better control of litigation, standardize safety protocols and enforce stronger risk management across members to reduce loss. Essentially, it gives the member organizations a customized approach to traditional insurance.

A group captive is an insurance company jointly owned and controlled by multiple businesses that come together to insure their own risks. Unlike traditional insurance, where premiums are paid to a commercial carrier, group captive members retain certain risks collectively—typically those that are predictable and manageable—while still purchasing protection for large or catastrophic losses. This model allows small- to mid-size companies to access the cost savings and control benefits of captive insurance, which are usually only available to large corporations through single-parent captives. Group captives only insure their member-owners and can be homogeneous (members from the same industry) or heterogeneous (members from various industries).

In a group captive, each member company appoints a representative to participate on the Board of Directors. Third-party service providers such as agents, brokers, or BevCap Management employees are excluded from Board membership, ownership, and voting privileges. The captive establishes committees in areas like loss control, finance, and underwriting to advise the Board. The ultimate authority for decisions lies exclusively with the Board of Directors.

Captive members experience:

• Long-term control over unpredictable insurance pricing
• Potential for reduced costs and return of unused premium and investment income
• Minimum and maximum costs known in advance
• Workers’ Compensation, General Liability, Auto Liability, Auto Physical Damage, Medical
• Responsive and agile service providers
• Enhanced loss control, risk management and claims services
• Buying power and broad distribution of risk

Profits can be retained within the captive for future claims, reinvested, or distributed back to the parent company, depending on its financial strategy and regulatory requirements.

Profits can be retained within the captive for future claims, reinvested, or distributed back to the parent company, depending on its financial strategy and regulatory requirements.

Businesses of various sizes, especially those with significant risk exposure, predictable losses, or difficulty obtaining affordable coverage, such as manufacturers, distributors, or construction firms, can benefit.

Captives can reduce insurance costs, provide tax benefits, allow for premium retention, and offer the ability to recapture underwriting profits that would otherwise go to a traditional insurer.

Captives can cover a wide range of risks, including property damage, liability, workers’ compensation, cyber risks, and even unique risks not typically covered by commercial insurers.

Group captive members are expected to actively participate in the governance and success of the captive. All members are expected to attend the annual board meeting unless exceptional circumstances prevent it. Members also contribute through committee involvement, with groups focused on Audit & Finance, Membership & Underwriting, and Risk. Participation in at least one committee is encouraged, and members are urged to serve on both the Audit & Finance and Risk committees over time to gain a deeper understanding of the captive’s operations. New members can observe committee meetings before choosing where to serve. In late spring, members are also expected to send representation to the annual Best Practice Workshop, which promotes the exchange of effective loss control strategies.