Awareness, ownership and performance: why group captives continue to gain momentum
Growing awareness, rising insurance costs and a desire for greater control are driving continued growth in the group captive sector, as John Pontin (pictured) explains to Captive Review.
The group captive insurance sector continues to expand, driven by a combination of greater market awareness, a desire for cost control and a growing appreciation among businesses that insurance should be tied directly to their own risk management efforts and resulting performance. According to John Pontin, president of Captive Resources, these factors continue to solidify group captive insurance as a mainstream risk financing option.
Pontin believes one of the most significant drivers of growth has simply been education. Reflecting on the past decade, he notes that awareness of the group captive model among risk managers and financial leaders was once remarkably low.
“I’ve been at Captive Resources for nine years,” he said. “The general awareness of the solution as a viable alternative for people in the middle to upper-middle market casualty segment is just much greater today.”
The company made a deliberate decision several years ago to focus on educating the market rather than promoting its own brand. According to Pontin, early surveys revealed that fewer than 10% of risk managers and CFOs understood how the group captive model worked or even knew it existed as an option.
“Our charge in both the marketing department and the sales organisation was to go out and educate the world as much as possible,” he explained. “Not educate about Captive Resources but educate on the solution itself.”
That effort appears to have had a measurable impact. Pontin said awareness levels have risen significantly, while the overall sector has experienced substantial growth. He points to the company’s own expansion from less than $2 billion in gross written premium when he joined the organisation to more than $6.3 billion today.
“People are just way more aware of it,” he said. “Brokers are more aware, risk managers are more aware, and the solution has become considerably more mainstream than it was even nine years ago.”
While education has helped fuel adoption, market conditions have also played an important role. Pontin highlighted the challenging commercial auto insurance environment as a key factor encouraging businesses to consider alternative structures.
“The auto market has made a big difference,” he said. “Auto rates are up tremendously across the industry.”
Unlike traditional insurance carriers, which often rely on broad rating structures and standardised models, group captives can focus far more closely on the characteristics of individual organisations.
“The captives we advise have the ability to actually look at the performance and commitment to safety of individual prospective member-companies,” Pontin explained. “Rates are based on actuarial analysis, individual performance, and an organisation’s commitment to safety.”
This distinction creates a compelling proposition for companies that invest heavily in risk management. Businesses with strong loss histories and robust safety cultures can achieve outcomes that more accurately reflect their own performance rather than broader market conditions.
“The captives don’t rate off models and scores,” he said. “They actually rate off the performance of individual companies. That’s a pretty big competitive advantage.”
The appeal extends beyond pricing. Pontin argued that many organisations value predictability and control in an environment where traditional insurance costs can fluctuate significantly due to factors beyond their influence.
“Businesses are trying to control their costs and understand that if they perform a certain way, they can do better on the expense side,” he said.
That theme of control lies at the heart of what Pontin sees as a longer-term shift in how organisations approach insurance purchasing. While traditional insurance markets remain heavily influenced by broader industry dynamics, group captives enable companies to establish a clearer connection between their own performance and the costs they incur.
“Market pressures dictate traditional insurance rates,” he said. “In the captive model, your performance and your rates are based on your last five years of history, your individual history.”
For many business owners, that relationship is highly attractive.
“You’re an owner of an insurance company,” Pontin said. “You pay based on your individual performance, and business owners like that in a world that’s pretty volatile.”
The model has proven particularly valuable in sectors that are often viewed as difficult to insure. High-hazard industries such as transportation and construction frequently encounter capacity challenges in traditional insurance markets, regardless of their individual safety records.
Pontin believes the group captive structure is uniquely positioned to evaluate these organisations more fairly.
“There are some real high-hazard classes, heights-exposed construction and tough transportation risks that are actually really good accounts and perform really, really well,” he explained.
According to Pontin, successful companies in these sectors are not benefiting from good fortune. Instead, their results stem from sustained commitments to workplace safety and operational excellence.
“They don’t perform really well because they’re lucky,” he said. “They perform really well because they are committed to safety.”
As a result, group captives can often provide opportunities where traditional markets may offer limited options.
“There are almost no industries that can’t be done in the group captive model for a company that is committed to safety and has performed reasonably well,” Pontin said.
A key ingredient in successful captives is active participation by members. Pontin repeatedly emphasises that group captives work best when members view themselves not simply as policyholders but as owners.
“Member-owner participation is a tremendously important part of this,” he stressed.
Successful participants engage with the captive, contribute to discussions and actively support fellow members. More importantly, they recognise that their actions have direct financial consequences.
“They have skin in the game,” Pontin explained. “They are rewarded for superior performance and, consequently, can be assessed for poor performance.”
For organisations committed to creating safer workplaces, the incentives can be powerful.
“If you are actively engaged and committed to safety, and you want to be better because it’s great for your employees to have a safer work environment, and there’s a monetary reward for that performance, this is a much better model.”
Technology is also beginning to play a larger role in supporting captive performance. While artificial intelligence has become a dominant topic throughout the insurance sector, Pontin sees its greatest value in improving education, engagement, and analysis.
“One big part of the model is active engagement,” he said. “What we can do is provide better education.”
AI-powered tools are helping organisations understand captive structures more effectively, particularly when new personnel enter leadership roles. The technology also enables consultants and brokers to evaluate prospective members more thoroughly and efficiently.
“We can actually do much better analysis of organisations in a matter of seconds,” Pontin said.
This enhanced analytical capability supports one of the captive model’s most important responsibilities: ensuring that new members align with the culture and performance expectations of existing participants.
“The group captive members actually expect the broker and consultant to work together to only bring best-in-class companies into the fold,” he said.
Pontin describes insurance as a profession that provides a front-row seat to business creation and growth, allowing professionals to support organisations as they expand and take calculated risks.
“Insurance has been a part of that entire thing,” he concluded. “We are creating solutions for people and have the ability to help them manage their businesses and partner with them.”
For Pontin, the group captive model represents the most rewarding chapter of that journey because it aligns incentives, encourages engagement and rewards organisations that invest in safety and long-term performance.
“People that want to gamble on themselves, that believe they can be better and safer, that they can get their employees home at night and save limbs and lives by committing to safety,” he said, “and then be rewarded for that financially – that has been an incredible part of my insurance journey.”
John Pontin is the president of Captive Resources. He can be reached at jpontin@captiveresources.com
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