CATALYSTS OF GROWTH
Despite an extended soft insurance market from 2002-2011
(during which commercial rates were extraordinarily low
at times), interest and participation in group captives have
continued to grow. Captive Resources, LLC estimates that
the group captives it consults to grew in premium volume by
300% and in number of member companies by 233% during
There are several underlying reasons for this popularity:
• The cyclicality of the traditional insurance market pricing model can hinder efforts by CFMs to maintain predictability and control. Member-owned group captives
appeal to companies seeking long-term control and
• Challenging economic conditions have prompted
companies to more aggressively control expenses and
look for different and innovative ways to reduce costs.
• A greater awareness and understanding of group captives
has led smaller companies to recognize that captive
ownership is no longer only for large corporations.
• Saturation in the single-parent captive sector has led
captive service providers to pursue opportunities in
the middle market, thereby raising awareness of group
• Improving availability and lower cost of credit has
facilitated membership. Letters of credit are the most
widely accepted form of collateral for member-owned
group captives. However, restricted credit had been an
impediment to some companies subsequent to the
financial crisis of 2008. The recession that followed
prompted some companies considering membership
to assume a wait-and-see posture.
The collective benefits of member-owned group captives
include the following.
Greater Control over Insurance Costs
Members are able to control their own insurance costs in
part because they are insulated from the adverse effects
of insurance market cycles on their businesses. Insurance
MEMBER-OWNED GROUP CAPTIVES
Controlling Insurance Costs
CohnReznick is an independent
member of Nexia International
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