IDEAL GROUP CAPTIVE MEMBER BUSINESS
The ideal group captive member business will be a privately held mid-market company with predictable risks, a strong focus on employee safety, and a great corporate culture.
It is relative easy to self-diagnose whether a business will be a good fit for group captive insurance. First, the business needs to pay a minimum of $100,000 annually in workers’ compensation, general liability, and auto insurance premiums combined. At this level, group captive insurance begins to make sense.
Next, the business needs to review their last five years of claims history. A business would likely be a good fit if on average claims paid equal less than 40% of the total premium paid.
Finally, it is important for the business to be financially strong. Every member needs to be able to meet their claims obligation. To ensure this, each member business puts up collateral to cover the first few years until their asset account has accumulated to a sufficient level.
There are additional nuances that help determine how much a business will benefit from joining a group captive. A broker with experience in group captive insurance programs will do a more complete evaluation once a business is identified as a likely candidate.