CAPTIVE INSURANCE IN THE CONSTRUCTION WORLD
Captives are becoming increasingly as insureds begin to assess the risk vs reward of the traditional insurance market. A captive insurer is an insurance company, wholly owned and controlled by its insureds, with the purpose of covering the insureds’ risks WHILE allowing the insureds to benefit from any underwriting profits.
There are a few misconceptions regarding captive insurance programs. Some examples are:
- We are too small for a captive
- We don’t like the idea of going self-insured
- Captives are too difficult to understand
- We don’t have the capital to fund a captive
These are common myths regarding why captives aren’t for you. Let’s debunk them.
We are too small. Surprisingly captive insurance programs can be for insureds paying as low as $150k for casualty insurance.
Self-Insurance is not for us. Captives are not considered “self-insured” programs. Captives, like traditional insurance companies, pull premiums from all their insureds to pay losses and cover overhead. Captives use the philosophy to only insure the best in class contractors – therefore, allowing for savings and underwriting profits to be returned to the insureds.
Captives take too long to put together. It’s possible to perform a feasibility study in a matter of a few days, and then form or enroll a captive within a couple of months.”
Finally, capitalization for captives is much less than most think. It can differ based on size and claims history, but chances are, if you are paying $300k a year for insurance, the capitalization costs will be exceeded by the savings very quickly.
Captives are built for the construction company that has a long term focus on safety and risk management and want to be rewarded for their low loss ratios. Upcoming hardening of the insurance market will continue to increase popularity in captive programs.
About the Author
Share This Story
Related Blogs
Fiduciary Responsibilities for Employer Health Plans: What Employers Should Know Now
When employers think about fiduciary responsibility, retirement plans often come to mind first. But recent developments make it clear that fiduciary duties also matter—sometimes significantly—when it comes to employer-sponsored health and welfare plans.
The New Era of Mental Health Parity Enforcement in 2026
Federal agencies have made mental health parity enforcement a top priority in 2026, and employers sponsoring group health plans are feeling the impact. Regulators are no longer satisfied with high‑level assurances that plans comply with the Mental Health Parity and Addiction Equity Act (MHPAEA). Instead, they expect detailed, data‑driven documentation showing that mental health and substance‑use‑disorder benefits are truly comparable to medical and surgical benefits. This includes not only the written plan design but also how rules are applied in real‑world scenarios.
The 2026 Specialty Drug Surge: What Employers Need to Prepare For
Specialty drugs have been a major cost driver for years, but 2026 marks a significant shift in both scale and urgency. With GLP 1 medications expanding into new indications, gene therapies entering the market at record pace, and oncology drugs continuing to rise in both cost and utilization, specialty medications are projected to account for more than 60% of total pharmacy spending this year. That’s a dramatic change for employers, especially considering that specialty drugs represent fewer than 5% of total prescriptions.