Why Should I Consider a Group Captive for Medical Stop Loss?

Medical stop loss group captives are in high demand. It is estimated that this segment of the market is now a $5 billion dollar industry (Berkley A&H, 10 Year Review), which is close to 20% of the stop loss market. Surprisingly, this growth has only taken 10 years as there are many different types of promoters in the market. If you are not talking about this with your client by now, it is very likely another advisor or captive sponsor is.


This concept is simple. Banding together like-minded employers, using a reinsurance agreement, to collectively gain leverage over the stop loss market. However there is much more value than meets the eye for employers and advisors....


Employer Advantages

  • Group captives are able to offer stop loss coverage for smaller employers with limited data than the commercial market typical is comfortable with
  • Typical ongoing risk at renewal is no longer forced into lasers and exclusions as the captive has leverage over the captive layer to absorb risk
  • Each employer has autonomy over their plan and there is no commingling of plan assets
  • Member employers share in any derived underwriting profits which reduces the net cost of stop loss coverage
  • The captive meetings are used as a "risk management sand box" where employers share experiences with various solutions that are designed to support health plans

Advisor Advantages

  • The group captive will often keep your employer clients engaged and focused on solutions to better manage their health plans with more at stake
  • Advisors differentiate themselves in their market as a risk manager and not an insurance selling broker
  • There is an opportunity to use the captive concept to cross sell into another line of coverage or solicit referrals from members
  • Additional revenue opportunity may be available


What is NFP's CaptivePlus Program?

Many NFP advisors have expressed a frustration with the medical stop loss group captive market. There are hundreds of group captives now and the majority are not optimized for employers and advisors. These captive programs are contractually/financially difficult to exit, offer limited transparency into underwriting and profits, and ultimately put their relationship with the employer first. Based on popular demand, NFP has created CaptivePlus.


CaptivePlus has many advantages over the other medical stop loss group captives in the market.

  1. Members of the program must have a broker of record with an NFP advisor, or Benefits Partner Member, to maintain membership in the program.
  2. The captive makes employers without claims experience more attractive to underwriters and provides a great entry into a partially self-funded plan.
  3. Using a data warehouse, NFP's Cost Containment Team will provide solutions to ongoing and projected risk.
  4. It’s a turnkey program with no capital requirements, very low collateral requirements, and competitive/transparent fees.
  5. NFP's Captive Practice, RISC, is available to support your team with administrative, marketing, and the sales process.
  6. RISC will be evaluate single parent captive solutions and other lines of risk (P&C) using group captives if desired.
  7. In the event the advisor needs to move a client out of the program we only require a 30 day notice and their pro rata share of surplus materialized while active is shared.

Is NFP's CaptivePlus Program Right For Your Client?

This group captive program is designed for companies with:

  • Small to midsize employers (approx. 50 – 750 enrolled employees)
  • The desire to assume a portion of financial risk through a self-funded health plan
  • Strong financial statements without short term fear of cash flow, outstanding accounts payable, payroll, or downsizing
  • A forward-thinking approach to risk management and employee wellness
  • Experience with captives for their P&C lines of risk


What Makes a Good Candidate for a Medical Stop Loss Captive?

Click here to see a list of questions to consider when evaluating a prospective client

Contact Us

If you have questions about CaptivePlus™ and how best to present it to a client, contact captiveplus@nfp.com. 

Additional Contacts

ContactImage

Dale Sagen

Vice President

dale.sagen@nfp.com

440-503-4442