Captive Options for Forward-Thinking Businesses

Byron Shultz| July 9th, 2024

Benefits+, Employee Benefits, Risk Management, Emerging Risks

It’s the ideal trifecta of insurance: reduce risk, save money, and drive more growth. These advantages are possible when using a captive, an innovative alternative to more traditional insurance programs that basically gives a single or group of best-in-class businesses the opportunity to self-insure. You gain more control and more potential for positive financial returns.

If your company follows best practices and has a record of strong risk management, a captive can be an outstanding option that rewards you for that performance. The better you control risk, the better the captive performs. That’s because all insurance premiums are set based on actuarial tables that assess risk and determine the amount of financial liquidity that’s required to cover potential losses. In traditional insurance programs, your premium helps cover the risk of not just your own organization, but also other entities that may not rise to the same level of risk management that yours does.

In a captive, you cover only your own risk or share risk with companies of similar risk profiles. You get a more attractive premium that matches your proven loss history, and the captive can issue dividends or reinvest any savings that result from low claims back into the program. Of course, The MJ Companies will continue to provide the important customer services you expect from any of our insurance programs, including responsive claims management and advocacy if you do suffer a loss. We will also evaluate the captive performance annually and make adjustments as the captive grows and your goals change.

The MJ Companies offer three types of captives:

Single cell & micro captives – You are the sole owner of this type of captive, covering only your own unique risk (or the risks of any of your subsidiaries or affiliates) within an individual “cell” that wholly owns its own assets and liabilities. It can be an excellent way to cover risks that are excluded or otherwise not covered by your primary insurance or to help you finance extended coverage on those primary policies.

Group captives – Reflecting its name, this category of captives collects companies with similar business interests or risk profiles into one larger captive. As examples, we support a construction captive, Japanese captive, healthcare captive and many more. You gain the opportunity to earn back a portion of your premium, as well as the chance to partner and learn from other like-minded companies in the same industry or with comparable insurance goals.

Employee benefits captives – With an employee benefits captive—ours is called CaptuRe—you can share the business risks and help insure the health plans of your own organization, as well as other captive partners. At the same time, you gain access to cost control analytics that can help you further reduce what you pay for benefits. It’s an ideal option for entrepreneurial-minded companies with 50-1,000 enrolled employees and $500K in current annual spend.

Ready to learn more?

Want to be insulated from traditional market swings and pay premiums that are based on your own loss history, risk profile or employee demographics? If you think a captive might be the right choice for your organization, The MJ Companies can share more information about joining or starting a captive. Just contact us at info@themjcos.com to learn more!

We’ll also take a deeper dive into our employee benefits captive, CaptuRe, in an upcoming blog—think structure, layers and more—so get ready to keep learning!