BUSINESS ISSUES
administrator( TPA), directly for selecting proper local counsel and assistance with overseeing the process of investigation and claims resolution, in accordance with policy provisions.
Direct Incentives for Risk
4 Management: Premiums to the member-owned group captive are established based exclusively on the member companies’ loss experience. Comparatively, in a traditional insurance arrangement, crane companies with excellent safety records and loss ratios far below the average in today’ s crane insurance marketplace, are likely paying nearly the same premium levels as companies with much higher loss histories.
In a member-owned group captive, if an owner’ s experience is better than the average experience in the market, they will realize lower-than-average premium costs. This incentivizes member companies to undertake more loss control efforts.
Direct Access to Reinsurance:
5 Unlike traditional insurance plans, a captive can go directly to the global reinsurance market and purchase coverage at wholesale rates because it is essentially an insurance company. Further, the price for reinsurance coverage is driven by the captive’ s own exposures and loss record, not the experience of the industry.
The captive does not have to work through a commercial insurer for this access, and this saves on the expenses associated with dealing with commercial insurers, such as commission costs, administrative costs and profit markup. Member companies can retain much more control over the selection of and arrangements with reinsurance partners.
Greater Potential for Profits:
6 Member companies are rewarded for effective risk management in member-owned group captives because unused loss funds are paid back to the captive company in the form of a dividend( less provision for risk sharing).
Also, investment income earned on loss funds as well as capital and cash collateral accumulate for the members
How Much New Members Save
72 percent of new members lowered costs vs. previous insurance plan.
36 %
33 %
17 %
13 %
0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %
benefits. In traditional insurance arrangements, investment income is retained by the insurer and in fact is a major source of income.
Harnessing AI to Enhance Captive Risk Control
Since the member-owned group captive structure contemplates“ unbundled risk control services” some progressive industry leaders have expressed interest in the potential AI for risk analytics and data to enhance operator risk awareness, as a feature in member-owned group captives.
Enhanced risk awareness is crucial for saving lives in operations. AI-driven innovation demands a shift from a tactical focus – how risk awareness is managed today – to a broader, strategic approach, emphasizing what an enterprise could implement to drive transformative risk improvement.
A key risk management advantage with member-owned group captive arrangements is that the owners decide the extent of AI design / utilization as part of their captive experience to control their own risk management destiny.
Why Join a Group Captive? Joining a group captive often results in a reduced insurance of policies saved new members > 30 %
of policies saved new members 20-30 %
of policies saved new members 10-20 %
of policies saved new members 0-10 %
% of savings over previous plan
premium over time. This is due to the fact that in a group captive, each member’ s premium is based on its own most recent five-year loss history.
Group captives recruit safetyconscious companies with better-thanaverage loss experience. This contrasts with traditional commercial carriers which base premium on a number of factors, including industry-wide loss experience, statutory requirements and overall portfolio performance. This more expensive risk pool can result in higher premiums than a lower-risk company may obtain as a group captive member.
By the second and third year of membership, the increased focus on holistic risk management, including post incident claims management, can drive members premiums down even further.
According to the III, a recent study indicated that almost threequarters of new bound policies in group captives resulted in lower premiums compared to members’ previous plans. Many members saw substantial savings, with about 30 % of new policies reducing costs by 20 % to 30 % or more. Additionally, 72 % of new members paid lower premiums compared to their previous insurance plans.
32 l September-October 2025