When Is the Right Time to Consider a Captive? A CEO’s Perspective

As a business leader, you’re constantly evaluating strategies to gain a competitive edge, reduce costs, and improve financial stability.  Insurance is one of the largest and most unpredictable expenses a company faces, yet many executives accept traditional insurance as a fixed cost without exploring alternatives.

Captive insurance—an approach where businesses form their own insurance company to insure risks through a syndicate of businesses, much like Lloyds of London—offers a way to take control. But when is the right time to make this move?

1. Your Insurance Costs Are Rising—And You Have Little Control

If your business is experiencing annual premium increases despite a strong risk management track record, a captive could be the solution. Traditional insurers base rates on industry trends, not just your individual claims history. A captive allows you to stabilize costs and benefit directly from good risk management.

2. You’re Facing Coverage Gaps or High Deductibles

Many businesses are finding that traditional policies come with more exclusions and higher deductibles. If your company frequently absorbs uninsured losses or struggles to find adequate coverage—whether for professional liability, cyber risks, or business interruption, a captive can step in to provide tailored coverage.

3. Your Business Generates Consistent Revenue and Wants to Improve Cash Flow

Captives aren’t just about risk management—they’re also financial tools. Instead of paying premiums to commercial insurers with no return, a captive allows you to retain underwriting profits and build financial reserves over time.

4. You Operate in a High-Risk Industry

Industries like healthcare, construction, transportation, and manufacturing often see fluctuating insurance markets. A captive can offer stability by insulating your business from market cycles and sudden premium spikes.

5. You’re Thinking Long-Term

A captive is a commitment, it’s a strategic decision, not just a short-term cost-saving measure. Businesses that take a proactive approach to risk management and financial planning will see the greatest benefits.

Is It the Right Time for You?

If any of these scenarios resonate with you, now might be the right time to explore a captive. At Alliance Captive Management, we help businesses assess feasibility, structure captives effectively, and navigate regulatory requirements.

Interested in learning more? Let’s discuss how a captive could fit into your risk management and financial strategy.

When Is the Right Time to Consider a Captive? A CEO’s Perspective

The right time to consider a captive is now.