What is Group Captive Insurance?

John Lightfoot | Oct 6, 2022 | minute read

group captive insuranceA group captive is an insurance company formed by the members for the benefit of the members. The group captive insures the risks of its owners; those owners then benefit from the group captive’s profits – premiums unused to pay claims. 

What Does a Group Captive Cover?

A group captive must cover workers’ compensation but can include general liability and automobile insurance. The group captive members have full ownership and control of the group captive insurance company.

The Benefits of Group Captive Insurance 

A group captive insurance company can benefit any mid- to large-size firm paying at least $150,000 in commercial insurance premiums each year, and that has historically low losses.

Free Download: The Definitive Guide to Group Captive Insurance

Companies who seek to join a group captive are evaluated on how well the company is run, whether it is financially secure, and its focus on safety and risk management. Each member of a group captive pays premiums based on their five most recent years of losses and exposures.

Once a member of the group captive, each company can influence how much they pay in premiums by positively controlling their losses.

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What are the Advantages? 

A group captive can provide a number of advantages. Members can expect:

  • Greater predictability in pricing
  • Insulation from market fluctuations
  • Greater influence in the claims handling process, and
  • Return of underwriting profit.

While it will take a few years for a member to realize most of the benefits, forecasting potential underwriting profit is a simple process. If your firm typically experiences a 30% or less annual loss ratio, a group captive can work for your firm.

With the group captive, the majority of the premium paid is set aside in the member’s loss fund. These funds are used to pay claims of the member. Any unused premium is returned to the member with interest.

This can mean as much as 60% of the member premium can be returned as a dividend to the member company or any one person(s) or entity they designate. A prospective member’s individual loss history can be evaluated to see the potential benefit.

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Free eBook: The Definitive Guide to Group Captive Insurance


Leap | Carpenter | Kemps Insurance Agency Can Help

Want to know if a group captive is right for you and your company? Contact us today to book a free consultation with a Leap | Carpenter | Kemps agent to find out.

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About The Author

My insurance career spans more than two decades and includes extensive work in group captives and construction, working with general contractors and subcontractors all over the State.

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