--- title: "Future of Risk: Captives Take Hold in Mid-market Companies" description: Captives—single or group owned self-insured companies—are gaining popularity with mid-market organizations as commercial insurance headwinds increase. image: https://www.risk-strategies.com/hubfs/Future%20of%20Risk_Captives_blog%20graphic.png --- - Industries Back to Main [ Industries ](https://www.risk-strategies.com/industries) - [ Agriculture ](https://www.risk-strategies.com/industries/agriculture/) - [ Architects & Engineers ](https://www.risk-strategies.com/industries/architects-engineers) - Aviation Back to Aviation [ Aviation ](https://www.risk-strategies.com/industries/aviation) - [ Aviation Business Insurance - Manned Risk ](https://www.risk-strategies.com/industries/aviation/aviation-business-insurance) - [ Non-Owned Aviation ](https://www.risk-strategies.com/industries/aviation/non-owned-aviation) - [ Unmanned Aerial System and Drones ](https://www.risk-strategies.com/industries/aviation/unmanned-aerial-system-and-drone) - 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[ Cargo & Transit Insurance Solutions ](https://www.risk-strategies.com/industries/marine-yacht/marine-cargo-and-transit-insurance) - [ Crew Medical Insurance ](https://www.risk-strategies.com/industries/marine/crew-medical-insurance) - [ Hull & Machinery ](https://www.risk-strategies.com/industries/marine-yacht/marine-hull-and-machinery-insurance) - [ Marine Claims Service ](https://www.risk-strategies.com/industries/marine-yacht/marine-claims-support) - [ Marine Construction ](https://www.risk-strategies.com/industries/marine-yacht/marine-contractors-insurance) - [ Marine Liability ](https://www.risk-strategies.com/industries/marine-yacht/marine-liability-insurance) - [ Ports & Terminals ](https://www.risk-strategies.com/industries/marine-yacht/marine-ports-and-terminals-insurance) - [ Protection & Indemnity ](https://www.risk-strategies.com/industries/marine-yacht/marine-protection-and-indemnity-insurance) - [ Recreational Marine Businesses ](https://www.risk-strategies.com/industries/marine-yacht/marine-businesses) - 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You are leaving risk-strategies.com By accessing this link, you will be leaving Risk Strategies website and entering a website hosted by another party. Please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of Risk Strategies website. We encourage you to read and evaluate the privacy and security policies of the site you are entering, which may be different than those of Risk Strategies. OK Cancel [![Connect with Our Team](https://no-cache.hubspot.com/cta/default/20256628/f1d83adb-981f-4b85-93a6-7a46077d7309.png)](https://cta-redirect.hubspot.com/cta/redirect/20256628/f1d83adb-981f-4b85-93a6-7a46077d7309) January 03, 2023 # Future of Risk: Captives Take Hold in Mid-market Companies [ Captive Insurance ](https://www.risk-strategies.com/blog/tag/captive-insurance) [ Future of Risk ](https://www.risk-strategies.com/blog/tag/future-of-risk) 5 min read ![Max Jong, National Captives Practice Leader, Managing Director at Risk Management Advisors](https://www.risk-strategies.com/hubfs/Risk_Management/RMA22-113-Max.jpg) [ Max Jong, National Captives Practice Leader, Managing Director at Risk Management Advisors ](https://www.risk-strategies.com/blog/author/max-jong-national-captives-practice-leader-managing-director-at-risk-management-advisors) - [Facebook ](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies) - [X (Twitter) ](https://x.com/intent/post?url=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies&text=Future+of+Risk%3A+Captives+Take+Hold+in+Mid-market+Companies) - [LinkedIn ](https://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies&title=Future%20of%20Risk%3A%20Captives%20Take%20Hold%20in%20Mid-market%20Companies&summary=Captives%E2%80%94single+or+group+owned+self-insured+companies%E2%80%94are+gaining+popularity+with+mid-market+organizations+as+commercial+insurance+headwinds+increase.&source=) - [Email ](mailto:?subject=Future%20of%20Risk%3A%20Captives%20Take%20Hold%20in%20Mid-market%20Companies&body=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies) ![Future of Risk: Captives Take Hold in Mid-market Companies](https://www.risk-strategies.com/hs-fs/hubfs/Future%20of%20Risk_Captives_blog%20graphic.png?width=640&height=300&name=Future%20of%20Risk_Captives_blog%20graphic.png) - [Facebook ](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies) - [X (Twitter) ](https://x.com/intent/post?url=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies&text=Future+of+Risk%3A+Captives+Take+Hold+in+Mid-market+Companies) - [LinkedIn ](https://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies&title=Future%20of%20Risk%3A%20Captives%20Take%20Hold%20in%20Mid-market%20Companies&summary=Captives%E2%80%94single+or+group+owned+self-insured+companies%E2%80%94are+gaining+popularity+with+mid-market+organizations+as+commercial+insurance+headwinds+increase.&source=) - [Email ](mailto:?subject=Future%20of%20Risk%3A%20Captives%20Take%20Hold%20in%20Mid-market%20Companies&body=https%3A%2F%2Fwww.risk-strategies.com%2Fblog%2Ffuture-of-risk-captives-take-hold-in-mid-market-companies) Captives—single or group owned self-insured companies—are gaining popularity with mid-market organizations as commercial insurance headwinds increase. Health care costs, nuclear verdicts, cyber-attacks, catastrophic climate events, and market-specific drivers are leading to sky-high premiums, prohibitive exclusions, and even complete lack of insurability as reinsurance dries up. Closely held, well-run mid-market companies can navigate around these headwinds by adopting captives as part of their risk management strategy.  To illustrate, a trucking company has strict health and safety programs in place along with regular driver training and monitoring. The company enjoys a stellar driver record yet, because of the overall trucking industry prevalence of distracted driving accidents and resulting litigation, the company is challenged with securing suitable insurance at a reasonable cost.  Captives are a viable option for companies like this.  The company is willing to assume more risk because of their positive safety record. A captive allows the business to take on a portion of the risk and through the captive, pay the premium to themselves. As the company maintains its clean record, they create a surplus in their own safety net. That allows them to take on more and more risk over time, while also getting tax benefits.   ### COVID catapulted captives to the mid-market risk management arsenal The COVID pandemic accelerated mid-market companies’ awareness and demand for captives. Many learned the hard way their property insurance with business interruption coverage had communicable disease exclusions or there had to be property damages to make a claim. This caused business leaders to take a closer look at captives to help protect them from the next global issue. Once they understood the role of captives in that scenario, they started to see the other enterprise risks they can effectively manage through captives.  ### A mid-market captive is a Swiss Army knife, not a silver bullet Mid-market companies are looking at captives as a Swiss Army knife—a tool with a lot of utility. Captives are not a silver bullet that magically and immediately cut costs. Rather, they are an elegant tool that meets a variety of long-term risk management needs. They give organizations the ability to toggle risk up or down, effectively managing the ebbs and flows of the commercial insurance market. They are in the driver’s seat to buffer the fluctuations inherent in insurance and reinsurance. Captives can augment a commercial policy’s gaps and exclusions. A captive ensures anything that slips past that primary commercial policy is covered. In this case, a captive is a backstop tool. Captives can be used for a specific risk area, such as supply chain disruptions, where premiums are high and exclusions abound. ### **Growth areas for mid-market captives** We are seeing mid-market organizations increasingly adopt captive strategies in these three areas. ***Group captives:*** Like-minded employers pool their resources to establish and manage their own insurance entities. These businesses will have similar risk profiles and risk management approaches and are able to spread the risk among all participants, reducing their exposure. Group captives make sense for numerous mid-market industries—from trucking companies to wineries to manufacturing—as they may not have the financial and administrative resources they need to set up single captives. ***Employee benefits captives:*** Many businesses believe they have no alternative outside the traditional market when it comes to offering group medical benefits.  Or they think that making a change to self-funding is complicated and risky.  Because of these reasons, they stay with traditional health insurance companies and accept double-digit cost increases each year.   At times, it can often be difficult for mid-size companies to find cost-effective medical stop loss coverage.  A proven approach to overcoming this hurdle is to join a medical stop loss group captive or form a single parent captive.  Both structures help bridge the gap between what employers need to manage risk and what the market is willing to offer in terms of coverage.  In addition to providing capacity, captives offer additional savings through dividends paid from underwriting profits.  ***Excess liability captives***: Excess liability insurance is becoming increasingly difficult to secure at a reasonable cost if it can be secured at all. Catastrophic losses from climate change-fueled natural disasters, nuclear verdicts, and third-party litigation costs are making commercial insurers shy away in this hard market. Captives can fill the void to manage unexpected risk. ### **The future for captives for mid-market companies** Brokers will start to embrace captives and recommend them to clients rather than worry about how that may affect business (and their commissions). The more mid-market businesses learn about alternative insurance like captives, the more they will expect brokers to offer them as part of the risk management strategy. Brokers will be wise to proactively recommend captives as part of the risk management strategy. Captives will spur innovation and new products in the insurance marketplace —for example, cyber liability insurance initially came out of the captive space. Where group captives take hold, there will be greater stabilization of the insurance market, as risk will not be held entirely by the commercial carriers. Captives’ adoption in certain lines like cyber-attack insurance will slow as rates, premiums, and terms improve in the commercial space. Fewer organizations will use captives to fund these lines, but they will shift captive coverage to other areas. In sum, more companies will be reaching for their captives Swiss Army knife to help them manage risk. Want to learn more? Find me on LinkedIn, [here](https://www.linkedin.com/in/max-jong-bb8a794/) Connect with the Risk Strategies Captives team at [captives@risk-strategies.com](mailto:captives@risk-strategies.com) The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.  [Subscribe](https://www.risk-strategies.com/blog/future-of-risk-captives-take-hold-in-mid-market-companies#subscribe) ### Subscribe via Email ![Max Jong, National Captives Practice Leader, Managing Director at Risk Management Advisors](https://www.risk-strategies.com/hs-fs/hubfs/Risk_Management/RMA22-113-Max.jpg?width=150&name=RMA22-113-Max.jpg) #### [Max Jong, National Captives Practice Leader, Managing Director at Risk Management Advisors](https://www.risk-strategies.com/blog/author/max-jong-national-captives-practice-leader-managing-director-at-risk-management-advisors) Max Jong is the Captive Practice Leader and Managing Director at Risk Management Advisors, an alternative risk and captive management firm. Max began his career at Northwestern Mutual in 1994 after graduating from UCLA. Over 12 years, he built a successful financial services practice while heading up an office overseeing 50 professionals in Los Angeles and Irvine, California. The office was perennially one of the top producing organizations in the Northwestern Mutual system. Max joined his partners at Risk Management Advisors in 2007 as he began to work with more sophisticated mid-market business owners. RMA specializes in the design, formation, and management of captive insurance companies. There’s also an emphasis on self-funded group benefits as well as other creative alternative risk management strategies. The firm assists business owners in better managing their risks without jeopardizing their balance sheets. In 2019, he headed up a merger with Risk Strategies, a Top 10 private national specialty insurance brokerage and consulting firm. Since then, he was appointed as the Captive Practice Leader to oversee the growth and development of the organization. For five years, Max served as an Independent Director for Fiat Lux Risk and Insurance Company, one of the largest and most sophisticated captive insurance companies. Fiat Lux was established by the University of California Regents to better manage the broad risks of the University of California system. Max has also been a lifelong supporter of Big Brothers Big Sisters of Greater Los Angeles. He initially volunteered to be a mentor in 1995 and is currently mentoring his second "Little." Max was asked to join the Board of Directors in 2000 and eventually served as their Board Chair. After 20+ years as an active board member, he continues to support the organization by serving as a Trustee. He is married to Alice, and they’re raising two young children, Hunter and Hayden. Max and Alice are happily married despite her irreparable mistake of going to USC. He loves to travel, golf, and is a hopeful Lakers fan. - [Share On LinkedIn ](https://www.linkedin.com/in/max-jong-bb8a794/) captive-insurance future-of-risk ### Related Posts [See all posts](https://www.risk-strategies.com/blog) ![](https://www.risk-strategies.com/hs-fs/hubfs/Freeway-traffic%2c-blurred-motion%2c-arial-view.jpg?width=450&height=250&name=Freeway-traffic%2c-blurred-motion%2c-arial-view.jpg) [ Risk Management Services ](https://www.risk-strategies.com/blog/tag/risk-management-services) [ Future of Risk ](https://www.risk-strategies.com/blog/tag/future-of-risk) 7 min read December 16, 2025 #### [ Systemic Risk in 2025: Key Lessons for Stronger Organizational Resilience ](https://www.risk-strategies.com/blog/systemic-risk-in-2025-lessons-for-stronger-organizational-resilience) Throughout 2025, the Future of Risk series demonstrated that the era of systemic risk has arrived, … [ Read article ](https://www.risk-strategies.com/blog/systemic-risk-in-2025-lessons-for-stronger-organizational-resilience) ![](https://www.risk-strategies.com/hs-fs/hubfs/Aerial-View-of-Crossroad-and-City-Traffic-at-Night.jpg?width=450&height=250&name=Aerial-View-of-Crossroad-and-City-Traffic-at-Night.jpg) [ Property ](https://www.risk-strategies.com/blog/tag/property) [ Future of Risk ](https://www.risk-strategies.com/blog/tag/future-of-risk) 5 min read November 18, 2025 #### [ The Future of Risk: How Parametric Insurance Helps You Withstand Systemic Risks ](https://www.risk-strategies.com/blog/the-future-of-risk-parametric-insurance-for-systemic-risk-resilience) Editor’s note: This article is the sixth installment in the 2025 Future of Risk series, which … [ Read article ](https://www.risk-strategies.com/blog/the-future-of-risk-parametric-insurance-for-systemic-risk-resilience) ![](https://www.risk-strategies.com/hs-fs/hubfs/An-aerial-sunset-view-of-a-multi-lane-road-intersection.jpg?width=450&height=250&name=An-aerial-sunset-view-of-a-multi-lane-road-intersection.jpg) [ Logistics and Transportation ](https://www.risk-strategies.com/blog/tag/logistics-and-transportation) [ Future of Risk ](https://www.risk-strategies.com/blog/tag/future-of-risk) 7 min read September 30, 2025 #### [ The Future of Risk: Systemic Pressures in Logistics and Transportation ](https://www.risk-strategies.com/blog/the-future-of-risk-systemic-pressures-in-logistics-transportation) Editor’s note: This article is the fifth installment in the 2025 Future of Risk series, which … [ Read article ](https://www.risk-strategies.com/blog/the-future-of-risk-systemic-pressures-in-logistics-transportation)