Captive Insurance Programs: What’s Ahead in 2015
The insurance and captive market continues to evolve to provide effective alternative risk solutions for businesses. Over the years, captives have started out writing medical professional liability, general liability and workers comp to including property and auto liability and more recently to adding cyber liability and employment practices. Here we take a look at some of what we should expect to see in 2015 when it comes to captive insurance companies.
During the last year there’s been an uptick in interest in captives for cyber liability as result of the prevalence of this risk across all industry segments. This has the captive industry looking to identify and explore innovative uses of captives to address issues such as cyber and reputational risk in addition to ways in which to improve risk management results. In fact, in March 2015, the Captive Insurance Companies Association (CICA) will be holding a conference that includes the topic of cyber. “In today’s technology-driven, highly connected environment, everything changes and moves faster than even just a few years ago. This constant change brings increased opportunities to look at new and innovative uses of captives to provide the strategic advantage businesses are looking for,” says CICA president, Dennis Harwick.
Another area where captives are increasingly being looked at is in healthcare. The Affordable Care Act (ACA) has many employers searching for alternative healthcare solutions to gain greater control over costs. A captive program is one solution that allows mid-size employers to reap the benefits of a self-funded health insurance program as part of a pooled arrangement with like-minded employers. A program can be set up whereby each participating employer establishes its individual claims risk level, but collectively shares the financial/claims risk. Captives can also yield dividends for a participating employer. In addition, by bringing companies together, the captive enables companies to gain greater insights on health plan issues, share what works and what doesn’t and enhance risk management practices. The power of this type of collaboration helps mid-size employers tap into the type of health risk management programs that were once only available for large employers.
In a recent Cayman Report, the increase in interest in group captives by the middle market area was discussed. Group captives are tipped for growth, according to those interviewed in the report. They are a great solution for those firms with smaller premiums, and in the last year growth in group captive membership among smaller businesses looking for a steady premium base has risen. Group captives often are set up to serve workers comp, auto liability and general liability.
These are just a few captive trends for the coming year. Caitlin Morgan specializes in providing a variety of captive solutions for clients, including a stop-loss captive that groups together high-performing companies (between 25-500 employers) to provide cost stability and accountability in healthcare. For more information about our captive solutions and how we can best assist you and your insureds, give us a call at 877.226.1027.