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Risk managers tap captives to provide control, flexibility - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk managers tap captives to provide control, flexibility by Gavin Souter From the VCIA ERM session, pictured are Melinda Young, Alberici, left, Jaime Shelton, One Gas, center, and Michael Baker, Graham Holdings. Alternative Risk Transfer/Captives , Risk Management Aug 12, 2026 BURLINGTON, Vermont – Captives can increasingly be used beyond risk financing to provide greater flexibility, stabilize business-unit costs and give companies leverage in commercial insurance negotiations, captive owners said. But the vehicles must be structured to ensure accountability, they said Wednesday during a session at the Vermont Captive Insurance Association’s annual conference. For Graham Holdings, a diversified conglomerate based in Arlington, Virginia, establishing a captive took years of discussions with successive chief financial officers before management became convinced of its value, said Michael Baker, vice president of risk management. One argument that drew executives’ attention was benchmarking data showing that about 95% of large companies comparable to Graham operated captives, he said. “I put that up there, and I got a pause,” Mr. Baker said. The captive also provided several benefits to the company, he said. For example, Graham owns businesses of widely varying sizes and risk profiles and a captive allows it to spread retained losses across the organization, helping protect smaller units from potentially disruptive claims. It also serves as a potential insurance vehicle for acquisitions that may bring difficult-to-place exposures. The captive also strengthened Graham’s position at renewals, he said. “When your underwriters realize you have a captive, it really helps in the negotiations,” because Graham can consider retaining a coverage if commercial pricing or terms are unattractive. The captive also gives business units greater budget certainty because large losses do not immediately hit their annual results. But units remain financially accountable because Graham allocates captive premiums among them, with operations generating larger losses ultimately bearing more of the cost. At One Gas, a natural gas utility in Tulsa, Oklahoma, governance and transparency are critical because captive premiums must also withstand regulatory scrutiny, said Jaime Shelton, director of risk and insurance. “Transparency and documentation are the two most important things,” she said. Over the past 18 months, One Gas has strengthened captive governance, including annual training for board members and a shift from annual to quarterly board meetings. The meetings review premiums, renewals, market conditions, retention levels, and potential new uses of the captive. That process can also lead to decisions not to retain a risk. For example, when wildfire insurance became difficult to obtain, the utility’s management considered placing the exposure in the captive but concluded that it had not sufficiently quantified the potential loss or its mitigation efforts. “We’re just not comfortable yet without knowing what that true risk is and taking that on captive,” Ms. Shelton said. Coverage decisions should consider the wider financial consequences for an organization, said Michelle D’Amico, senior consultant with Aon’s captive consulting team, who moderated the session. “It’s one thing to say, ‘We’ve got this excess capital, let’s put it to use,’ but you need to understand” the broader impact, she said. St. Louis-based contractor Alberici has expanded its captive to cover a subcontractor default insurance program, said Melinda Young, vice president of risk management. The program allows Alberici to manage defaults itself rather than rely on a surety and has changed how operational teams approach subcontractor selection. The captive, established more than 25 years ago, also funds the company’s 12-person risk management department and has become profitable enough to support broader corporate objectives, including paying a dividend that helped finance a 2023 acquisition. Still, expansion must make economic sense, Ms. Young said. “We like risk that we can quantify and control as opposed to taking on catastrophic risk,” she said. Related News Amynta Group makes Southern States buy August 12, 2026 Boom by 2030 forecast for global data center insurance market August 12, 2026 Cash lender owed no defense in $1 billion fraud case, judge rules August 12, 2026 Prison worker’s training injury comp claim, not constitutional seizure August 12, 2026 AI agent muscles into gym waitlist August 12, 2026 Maritime law bars consortium claim by seaman’s wife August 12, 2026 Business Insurance announces Women to Watch winners August 12, 2026 East Asian nations brace for historic typhoon season August 12, 2026 Insured cat losses hit six-year low: Swiss Re August 12, 2026 Facebook-f X-twitter Linkedin-in Business Insurance is a singular, authoritative news and information source for executives focused upon risk management, risk transfer and risk financing. 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