When and How to Join a Fleet Captive

As your fleet continues to grow, you might find yourself facing rising insurance costs with little control over premiums. That’s where a fleet captive can make a significant difference. But how do you know if joining a captive is right for your business, and when is the best time to make the move?

In this article, we’ll break down when and how to join a fleet captive, focusing on the casualty lines of business: Auto, General Liability, and Workers’ Compensation. If you’re spending $200,000 or more annually on these three lines, you’re likely a good candidate for a captive. Let’s dive in.

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What is a Fleet Captive?

A fleet captive is an alternative insurance solution where multiple companies pool their resources to form their own insurance company. By joining a captive, members gain more control over their insurance costs, benefit from underwriting profits, and have the potential to receive unused premiums back.

When Should You Consider a Captive?

A good rule of thumb is to evaluate your insurance spend on the casualty lines: Auto, General Liability, and Workers’ Compensation. If your company is paying $200,000 or more in these areas, it’s worth exploring a captive. This threshold typically indicates that your business is large enough to benefit from the risk-sharing and cost-control advantages of a captive.

How to Join a Captive

1. Assess Your Performance
   One of the first steps is to evaluate how your company would have performed if you were in a captive for the last 5 to 6 years. This is done by putting together a snapshot of your historical claims and premiums. Seeing the potential savings—or identifying areas needing improvement—can be a real eye-opener. As Todd Bergen, Business Insurance Executive at McConkey Insurance & Benefits, explains, “Either companies realize they need to get their act together, or they’re saying, ‘Wow, we should have joined a captive six years ago.’”
2. Understand the Requirements
   Captives require members to demonstrate a commitment to safety and risk management. This means having robust fleet safety programs and consistent documentation. Why? Because one of the biggest legal exposures for fleets is punitive damages, which aren’t covered by insurance. Being proactive about safety can help protect your company from costly nuclear verdicts.
3. Evaluate Your Risk Appetite
   Captives aren’t for everyone. They involve taking on more risk, but with that comes the potential for greater reward. If your company is financially stable and has a culture of safety and compliance, a captive could be a strategic move to gain control over your insurance costs.
4. Partner with an Experienced Advisor
   Navigating the complexities of joining a captive can be challenging. Partnering with an experienced advisor, like McConkey Insurance & Benefits, ensures you have the guidance you need to make informed decisions. With over 20 years of experience in the captive space, McConkey can help you evaluate your options and support you throughout the process.

Is a Captive Right for Your Fleet?

Joining a fleet captive can be a game-changer for growing companies, offering cost control, risk management, and potential financial returns. However, it’s crucial to assess your company’s claims history, risk tolerance, and commitment to safety before making the leap.

If you’re considering a captive or want to learn more about whether it’s the right fit for your fleet, reach out to McConkey Insurance & Benefits. Our team of experts is ready to help you explore the possibilities and guide you through the process.

Take Control of Your Insurance Costs

Don’t wait until another renewal cycle brings higher premiums. Start the conversation today and discover how joining a fleet captive can help your company save money while maintaining comprehensive coverage.

Contact McConkey Insurance & Benefits to learn more about fleet captives and how they can benefit your business at 717-755-9266 or info@ekmcconkey.com.

McConkey Insurance & Benefits are proud sponsors of CNS Safety and Compliance Conference.