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....
- 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
- 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