Captive Insurance
Captive Insurance Companies Association Special Section
Agency captives can provide additional revenue
Great American has a long track record with this model
By Michael J. Moody, MBA, ARM
The captive industry has grown and matured significantly from the original concept that Fred Reiss introduced more than 60 years ago. Originally, the concept was primarily directed to provide an alternative risk financing approach for Fortune 500 corporations. The approach is one that allows corporations to be able to retain a portion of their risks through the use of a wholly owned insurance company. However, as the captive movement has expanded, so too has the ownership aspect of the concept.
Today, much of the captive market is centered on middle market accounts. As a result, creative approaches such as group and association captives have begun to flourish, as have rent-a-captives and segregated cell captives where multiple owners are involved with the captive. Another type of captive that has been introduced since the original concept is the agency captive. Agency captives represent a significant departure from the more traditional captive model in that the agency involved is the one that has the "skin in the game." Since being introduced, agency captives have provided a viable alternative to traditional profit sharing for agents who wish to diversify their revenue stream or be better compensated for their niche expertise.
Concept overview
Several carriers have ventured in and out of the agency captive business over the past 10 or 12 years; however, one major carrier has made a long-term commitment to the agency risk-sharing business model. The carrier, Great American Insurance Group (GAIG), has been actively involved with this aspect of the captive marketplace since 1999 and currently has 24 agency captives. Like the majority of Great American's captive business, the agency captive business is housed in its Alternative Markets Division.
In essence, GAIG's Alternative Markets
Agency captives can provide additional revenue
Great American has a long track record with this model
By Michael J. Moody, MBA, ARM
The captive industry has grown and matured significantly from the original concept that Fred Reiss introduced more than 60 years ago. Originally, the concept was primarily directed to provide an alternative risk financing approach for Fortune 500 corporations. The approach is one that allows corporations to be able to retain a portion of their risks through the use of a wholly owned insurance company. However, as the captive movement has expanded, so too has the ownership aspect of the concept.
Today, much of the captive market is centered on middle market accounts. As a result, creative approaches such as group and association captives have begun to flourish, as have rent-a-captives and segregated cell captives where multiple owners are involved with the captive. Another type of captive that has been introduced since the original concept is the agency captive. Agency captives represent a significant departure from the more traditional captive model in that the agency involved is the one that has the "skin in the game." Since being introduced, agency captives have provided a viable alternative to traditional profit sharing for agents who wish to diversify their revenue stream or be better compensated for their niche expertise.
Concept overview
Several carriers have ventured in and out of the agency captive business over the past 10 or 12 years; however, one major carrier has made a long-term commitment to the agency risk-sharing business model. The carrier, Great American Insurance Group (GAIG), has been actively involved with this aspect of the captive marketplace since 1999 and currently has 24 agency captives. Like the majority of Great American's captive business, the agency captive business is housed in its Alternative Markets Division.
In essence, GAIG's Alternative Markets