employee benefit captiveEarlier this month, the Captive Insurance Companies Association (CICA) released their Annual Captive Insurance Market Study at their annual conference in Scottsdale, Arizona. This is the 14th consecutive year that CICA has released this survey, which is widely accepted as a barometer for the captive industry.

It is always interesting to see what direction the captive owner community is moving in. These are professionals on the front lines of risk financing who often see, and react, to the coming forces before some employers do.

This year, CICA polled 133 pure and group captive owners on a number of topics. There is plenty of insightful information that can be gleaned from the results, most notably to us was the rapidly growing interest in placing employee benefit in captives.

According to the survey, only 13% of pure captive owners and 8% of group captive owners currently wrote employee benefits in their captive.  These figures reflect coverage for medical (stop-loss), which is the most widely accepted employee benefits coverage for captives according to the respondents.  Another 9% and 6% respectfully of pure and group owners polled were likely to write medical stop loss  in their captive during the next three years.   Probably more telling of the reality of the market is that 41% of all pure captive owners surveyed will either be placing medial stop-loss or looking at placing it in their captive, with 31% of group captives saying the same thing.

Drilling down deeper, the report also highlighted additional areas where pure captive owners will be considering employee benefits program for their captives: 30% will consider Disability Insurance; 29% – Life Insurance; 26% – Accident & Health; 21% Foreign employee benefits; and about 7% will look at Retiree Medical.  For group captive owners, they are also considering funding their member’s employee benefit programs: 27% will look at group Accident & Health coverage; 21% – Disability; 17% Life Insurance; 11.5% Retiree Medical; and 6% will review foreign programs.

Unsurprisingly, according to CICA, Affordable Care Act (ACA) changes and delays are a driving force for the growing interest in seeking an alternative method of funding employee benefits.

The results of this survey are not surprising to our Captive Consulting Team. Over the past few years, we have seen a dramatic increase in client interest in alternative funding solutions for employee benefits. To meet this growing need, we have been working with insurers and service providers alike for years to help prepare them for this growing demand and to help create competition in the market place for our clients.  It is a win-win.

At Spring, we pride ourselves at staying ahead of the curve. By analyzing a number of factors, including external and political forces, our consultants are able to envision the direction of the industry and provide clients with the most innovative and beneficial solutions before everyone else.

Helping employers become more efficient fund their employee benefits in captives is not just another example of how Spring stays one step ahead of industry trends, it is how we drive industry trends through innovation and execution. We have been developing innovative employee benefit captive solutions for years; going so far as to develop patented funding methods for saving employer’s money.

See also: eBook: Funding Employee Benefits Through a Captive

If you are an employer that is feeling the crunch of rapidly increasing employee benefit costs and regulations and are seeking a way to fund your benefits in a more cost-effective and efficient way, you would likely benefit from speaking to our experienced consultants. Spring’s Employee Benefits, Risk Management, Captive Insurance and Actuarial Consultants can help you evaluate your business’ needs and determine if a captive is your best solution.

Contact us today and start putting the techniques used by more and more of those “in the know” in the captive industry to work for you.


Image credit: Chris Potter via flickr

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Karin Landry

Karin Landry

Managing Partner at Spring Consulting Group, LLC
Karin Landry, ACI, CLTC, GBA is the Managing Partner for Spring Consulting Group. Karin has over 25 years of experience in the insurance, health care, risk financing, retirement and benefits industries. She is an internationally recognized leader in captive insurance strategy, benefits and financing. She is Past-Chairman of the Board of The Captive Insurance Company Association and a member of the ERISA Industry Committee and was recently appointed to the Board of Directors for Fallon Community Health Plan. She is also a Professor of Employee Benefits and member of the finance committee for the International Center of Captive Insurance Education part of the University of Vermont. Karin’s expertise around benefits allowed her to co-author a white paper for Business Insurance Magazine titled “Captives for Benefits: How to Use a Captive to Save Money and Enhance Benefits Coverage”, which is currently a top seller. Both Vermont and the US Virgin Islands asked Karin for input and guidance with their recent legislative changes. Prior to joining Spring, Karin was President of Watson Wyatt Insurance & Financial Services in the United States and Head of the Health & Welfare division for the eastern region.