“If they can increase their medical malpractice retention and fund that in a
captive and save on the commercial premium, they’re going to do that.”
Michael Serricchio, Marsh
loss group captives market, but not enough carriers were willing to
share the data necessary to deliver accurate results. Regardless of its
current measurability, I consider this to be one of the fastest growing
segments within the captive insurance industry.”
Captives manager Strategic Risk Solutions’ (SRS) annual market
update webinar looked at the growth in gross written premiums in
three group captive sectors.
“We looked at premiums, as the industry typically reports on
numbers of captives but that isn’t necessarily a true reflection of the
growth or lack of growth as it ignores what is happening with the
existing captives,” explains Andrew Berry, SRS chief operating officer
and managing director.
As shown in Figure 1, SRS created an index of premium growth over
the past five years with premiums in 2012 set to 100 to standardise
the data. For its medical stop loss clients, SRS used gross written
premiums from eight of its group clients, of which one includes 10
separate medical stop loss cells.
As the data show, the number of premiums written in medical stop
loss group captives under SRS management increased more than
five-fold in this five-year period.
Berry suggests that each of these sectors—risk retention groups
(RRGs), property and casualty group captives, and medical stop
loss group captives—are affected by different market forces
“Groups generally are more influenced by competition with the
commercial market than single parent captives, so it is somewhat
surprising that the property and casualty group captives continue to grow
as we have been in an extended soft market for these lines,” says Berry.
For small to mid-size employers looking to gain some control over
their healthcare costs, using group captives to fund a portion of
medical stop loss is one of the few options available.
“The medical stop loss group captive structure is gaining acceptance
and traction in terms of the number of new captives being formed, and
also growth within the existing captives due to the implementation of
forward-thinking cost-containment strategies and, in turn, programme
success,” says Berry. “The result is some explosive growth in the
sector, which appears to be continuing into 2018.”
On the single parent side, Giles suggests it is difficult to measure
overall growth in this market as very few individual captives are
formed specifically for medical stop loss.
“The medical stop loss is typically added as a new line of business
to existing single parent captives which makes both identification and
quantification very difficult,” he explains.
With specific regard to the group captives market, Giles says there
has been a huge increase in the number of existing mid-sized selfinsurers
(250 to 1,000 people) participating in group captives.
“Much of this growth has been from large heterogeneous ‘open
market’ programmes, primarily sponsored by specialty programme
managers or managing general underwriters.
“We are also experiencing an increase in group captives that cater
to very specific (homogenous) industry verticals such as hospitals/
healthcare, higher education, public/private schools, and even
emerging market segments like craft breweries,” he says.
Giles suggests that an overall growth measurement for group
captives should be based on the number of individually participating
employees and corresponding medical stop loss premium volume
written within a group captive, as opposed to simply going by the
number of separate or distinct group captives.
“It’s very difficult to quantify, but growth within group captive participation,
and the number of group captives, has been substantial,” says Giles.
“Two years ago, the Self Insurance Institute of America (SIIA) sought
to conduct a market survey to measure the size of the medical stop
Figure 1: Group captive growth by premiums 2012–2017
2012 2013 2014 2015 2016 2017
P&C Group Captive Premiums
MSL Group Captive Premiums
Note: Premiums in 2012 set to 100 to standardise the data
16 US Captive 2018 www.captiveinternational.com