How to Select and Join the Group Captive that is Right for You

Group captive insurance programs can benefit mid-to large-size companies that pay at least $150,000 in commercial insurance premiums per year, have historically low losses, and are financially sound.

If your company fits this description and you’ve determined a group captive is right for your business, it’s time to select and join the captive that is right for you.

How to Select a Group Captive

There are a few things to consider when searching for the best group captive for your company. But before you dive in, it’s best to have an experienced group captive agent guide you through the process.

Your agent will help you evaluate the following group captive characteristics:

1. Where is the group captive located?
2. How many and what types of companies are members of the captive? Is the group captive industry-specific or heterogeneous, meaning it’s made up of companies from different industries?
3. Is it easy to get all the necessary information and questions answered?
4. Does the group keep your information and data secure, meaning it’s not shared between the members?

What to Expect During the Captive Review

The group captive and the captive manager evaluate all potential members, taking a deep dive into your company’s background, loss history, and financial stability.

More specifically, the captive will review:

• Claims history. The captive needs to ensure that your company has a low number of claims and will look at five years of recent claims history.
• Financials. Company financials will be reviewed to analyze your company’s financial health. Income statements, balance sheets, and statements of cash flow, among other statements, will be requested in order to determine the financial strength of your company.
• Insurance policies. The captive manager will review all current policies to ensure the coverage will be matched under the group captive.
• Premiums, payroll, and sales history. Five years of this data will be reviewed and used for actuarial pricing, which is used to develop premiums that will cover loss from based on risk probability. The review of this information will determine if your company is a good fit for the captive.

The review and qualification process can take some time, depending on the underwriting requirements of the group you choose. You may need time as well to learn and understand the group captive product.

Be prepared and remember that this small investment in time can pay off by providing you the opportunity to have better control over your insurance, including paying lower net insurance premiums.

Acceptance into the Group Captive

Once the review and analysis are complete, the captive manager presents a proposal for the premium amount and claims fund deposit that protects all the members of the captive.

Once you accept the pricing mode, the final underwriting is completed. Coverage begins when you accept the terms and make your first payment, setting you on your way to better control your company’s insurance destiny.

Can I Leave the Group Captive?

While the process is in-depth and lengthy to join a group captive, leaving the captive is much easier. While our goal is to educate any prospective member about the group so they can make a moral commitment to stick with it for a few years, all insurance policies within the captive have a one-year term.

Any member can leave at the end of a policy term. Members that do leave the group will have any collateral and dividends held until their last policy year is closed, which is generally four to five years after expiration. Be sure you are familiar with the captive’s processes for exiting the group captive prior to joining.

Watch this video to learn more

Your group captive agent and the group captive manager will provide all the details you need to make the most informed decision about joining a group captive insurance program.

To best experience the benefits of a group captive, it's best to commit to a minimum of three to five years. Most companies, however, choose to remain with the group captive for the long term as they realize the financial rewards of being in the group.

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Leap | Carpenter | Kemps Insurance Agency Can Help

Do you want to learn more about group captive insurance programs and begin the process of evaluating if a captive is right for your company? Talk with an expert group captive agent at Leap | Carpenter | Kemps to find out.