What kinds of businesses do captives work best for?
The pattern is trouble in the traditional market, not an industry list
Queen does not answer with a list of industries so much as with a test. The businesses captives suit are the ones that struggle to buy insurance in the traditional market. Healthcare, and transportation such as trucking, come up because they are chronically hard to place, and he says captives are a great solution when the traditional solutions fall apart.
Asked which businesses captives work best for, Queen reaches for the common factor rather than the categories. The best candidates are the ones traditional insurance handles badly. He names healthcare businesses and transportation, and mentions the marijuana industry as a market that went looking at captives when nobody else would write it, including risk retention groups formed for testing laboratories.
Real estate arrives in his answer the same way, as a market that turned to captives when pricing in Florida rose steeply enough to break the usual options.
Key takeaways
Queen's test is not the industry but the experience of buying: businesses that struggle with traditional insurance solutions are the ones captives suit.
Where admitted carriers dominate, he says captive opportunities are scarce, because the conventional market is already doing the job.
For middle market companies he treats buying in the excess and surplus lines market as the practical signal that a captive is worth examining.
The inverse is the useful half. Where the admitted carriers dominate a market, Queen says you are probably not going to find many captive opportunities, because the traditional product is working. His exception is scale: very large companies form captives regardless, and he notes Disney holds more than one.
For middle market companies he offers a rough signal instead. If a business is buying in the excess and surplus lines market, which covers most professional lines, unusual liability and obscure property, that is where the captive opportunity tends to be.
From the conversation
Matt Queen
Captive Insurance Attorney, author of Modern Captive Insurance
“So what we see here is that captives are a great solution when the traditional solutions fall apart.”
This answer begins at 2:36 of the full conversation. Watch or listen to the whole thing.
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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