In 2022, Artex carried out a study to determine the extent to which the members of a group captive program were able to reduce their cost of claims. The insights clearly showcase how companies improve their risk profile over time and show a strong correlation between reduced claims costs and discounted insurance premiums.
There are multiple reasons why a company might decide to join a group captive program. Group captives allow like-minded organizations, often (but not always) from the same industry sector, to pool their resources, share loss insights and benefit from economies of scale.
During a challenging insurance market, the benefits are particularly compelling, with group captive membership offering greater control over claims, access to broader coverage and discounted premiums. Companies attracted to a group captive model already tend to have a strong safety and risk management mindset. By joining forces with other members, they can take this to the next level and see the benefits more directly than is typically the case within the commercial insurance market.
As owners of the program, members are also able to earn investment income for every dollar put into the captive that's not being used to pay for claims and/or fixed costs. Looking ahead, this benefit is likely to become more of an attraction as interest rates rise and as group captives writing longer-tail lines of business consider potential opportunities within their asset and liability matching strategies.
Group captive members monitor their performance on an individual basis over time, but it can be difficult to access broader metrics. We're operating in an era where clients are looking to make decisions based upon data and insights. Chief financial officers (CFOs) need the ability to accurately demonstrate the extent to which a group captive structure will benefit their company over time and help them benchmark progress. In particular, they need to show how a reduction in insurance costs could benefit the bottom line long term.
Read our whitepaper to learn more about the proven benefits of group captive membership as highlighted in the study, including reduction in claims costs, reduced OSHA frequency rate, reduced workers' compensation premiums, redistribution of underwriting profits, and enhanced safety and risk management.