In today’s challenging insurance market—marked by rising premiums and limited flexibility—many companies are rethinking their approach to coverage. For growing businesses in Colorado, one increasingly popular solution is group captive insurance.
This alternative risk strategy can offer greater control, cost efficiency, and long-term stability. But how exactly does it work, and is it the right move for your business?
What is Group Captive Insurance?
Group captive insurance is a type of self-insurance where multiple businesses join together to form and own their own insurance company—called a captive. Instead of paying premiums to a traditional insurance carrier, members pool their funds to cover claims, purchase reinsurance, and manage risk collaboratively.
The result? More influence over claims management, policy structure, and premium outcomes.
How Group Captive Insurance Works
Here’s a simplified breakdown of how group captive insurance programs typically function:
- Membership: Companies with strong financials, solid loss history, and proactive risk management may qualify to join a group captive.
- Premium Contributions: Each member contributes premiums, which are used to fund claims, cover reinsurance costs, and build reserves.
- Claims Handling: The group shares a portion of the risk and often works with third-party administrators to handle claims.
- Profit Potential: When claims are lower than expected, members may be eligible to receive a portion of unused premiums or investment income.
- Governance: Each business typically has a voice in key decisions—adding transparency and ownership to the insurance process.
Benefits of Group Captive Insurance in Colorado
At Conexus Insurance Partners, we’ve seen a surge in interest from Colorado-based companies seeking more control over their insurance programs. Here’s why group captives can be especially beneficial:
- Cost Management: As rates climb across commercial insurance markets, group captives offer a path to potentially lower and more stable long-term costs.
- Financial Incentives for Safety: Businesses with strong safety cultures can directly benefit through surplus returns when claims are minimized.
- Peer Collaboration: Members often share operational insights and best practices, creating a built-in business support network.
- Reduced Market Volatility: Captives help insulate members from unpredictable rate hikes or restrictive policy changes.
- Profit Retention: Instead of funding a commercial insurer’s profits, members may benefit from unused premiums.
Is Group Captive Insurance Right for Your Colorado Business?
Captive insurance isn’t for everyone—but it may be a strategic fit if your company has:
- At least $150,000 in combined annual premiums (for workers’ comp, general liability, and auto)
- A strong safety record and claims history
- A long-term view on risk management and insurance
- The desire to gain more control over insurance costs and coverage
Participation in a group captive involves financial and operational responsibilities and should be evaluated carefully. We recommend working with a knowledgeable advisor to determine if it aligns with your goals.
Frequently Asked Questions
Q: What types of businesses in Colorado benefit most from group captive insurance?
A: Industries like construction, manufacturing, logistics, and professional services often find value—especially those with consistent risk exposure and a focus on safety.
Q: How much control do I really have in a group captive?
A: Members typically help govern the captive, influence key decisions, and have more say over underwriting, claims handling, and risk management strategies.
Q: Can I leave a group captive if it’s not working for my business?
A: Yes, but each captive has specific participation and exit rules. It’s important to understand those terms upfront before joining.
Explore the Power of Group Captive Insurance in Colorado
As a forward-thinking agency with experience in alternative risk strategies, Conexus Insurance Partners helps businesses across Colorado explore whether group captive insurance is the right fit. We’ll walk you through the numbers, explain how it works, and guide you through each step of the evaluation process.
📞 Ready to take control of your insurance strategy?
Contact our Colorado-based team at Conexus Insurance Partners to learn more.
