Should I Start a Captive Insurance Program?
by Kelly Reed

Should I Start a Captive Insurance Program?

Is my company taking on too much, too little or just the right amount of risk in my insurance program?

Investigating a Captive is on my 2012 strategic initiative list?

Is my company large enough to start or join a captive?

What are the benefits of doing so?

Ultimately what all of these questions come down to is “How do I take on more risk?”  Before we discuss how you take on more risk, we need to understand where you are currently at today.  Picture a straight line with multiple points on it.  The far left side of the line represents a company having a fully insured program.  The right side of the line reflects a company who owns and operates their own captive.  Where does your business fall?


Many businesses today want to jump from a fully insured program (far left) all the way to a captive (far right) and skip over the points in between.  This becomes a daunting task and a severe shift in the amount or risk a company takes on.  The administration and responsibility an insured takes on is a direct relationship with the amount of risk taken on.  So what are ways that a company can take on additional risk over time and become more comfortable with the concept of “risk sharing”?  A few ways to take on risk are:

  • Deductible
  • Profit Sharing Plan
  • Retrospective Pricing Plan
  • Group Captive
  • Single Cell
  • Single-Parent Captive

Why does this matter to me or what are the benefits?  An associate once said to me, “The ability to enter a captive is the reward for good performance over time.  The business is rewarded with a portion or all of the underwriting profit.”

For more information on, “How to determine if my company is taking on too much, too little, or just the right amount of risk” contact Kelly Reed 906.315.7227  |

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