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 and MGA Executive, Author of Modern Captive Insurance
“So what we see here is that captives are a great solution when the traditional solutions fall apart.”
Transcript
Read the full transcript 5 turns
HostWhat kind of businesses do you see captives working best for? And what do those businesses have in common? The
Matt Queenbest businesses for captives are going to be the businesses that struggle with traditional insurance solutions. Most of your healthcare businesses are going to be great. Transportation, like wheels, trucking, it's going to be a great fit. And then just kind of odds and ends in the market. For a long time there, the marijuana industry was looking at captives. And there were actually a couple of mispretension groups that were created
Matt Queenfor like laboratories that were testing the percentage of marijuana in hemp products. For example, there was a boom of captives in real estate space when Florida basically fell into the ocean due to just extraordinary rises of insurance pricing. So what we see here is that captives are a great solution when the traditional solutions fall apart. So in your markets that
Matt Queenare dominated by the admitted carriers, probably not going to find a lot of great captive opportunities. With the exception being, if you're absolutely enormous, Microsoft, Disney, you know, Disney has like two different captives that I know of, they're probably more than that. Yeah, they all have captives. But for the middle market companies, you can pretty much guarantee if they're in the ENS markets, the excess and surplus lines markets. So that'd be most of your professional lines
Matt Queen, unusual liability, obscure property. Yeah, those are going to be your captive opportunities. That
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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