June 15, 2020

The NCEO Captive Insurance Initiative: ESOP Companies Working Together to Reduce Costs

Here are three things I believe: ESOP companies are well-managed, they tend toward being open with information, and they are generous about sharing best practices with each other. If I’m right, then any group of ESOP companies is likely to have better-than-average risk profiles. And if that’s true, it should be possible to translate these characteristics into better insurance opportunities for ESOP companies.

The NCEO has been exploring ways that employee-owned companies can mutually benefit by working together around insurance. We have come to believe that an NCEO captive insurance program might directly benefit our members and allow them to have more control over and transparency into their insurance programs.

For those not familiar with the term, captive insurance programs are formed by a group of companies that create their own insurance company. The captive insurance company covers its members’ losses up to a certain level, at which point traditional insurance coverage begins. If members of the captive insurance group control their claims, the savings go back to its members. I won’t spend a lot of time here explaining how captive insurance works, but we have more details, an FAQ, a video from our partners at Scott Insurance, and other resources on our insurance page.

We introduced this idea at our virtual conference in April, and I’m happy to say that dozens of companies have expressed interest. That’s enough for us to believe that this is an idea worth pursuing.

If you would like to join a meeting to learn more, we have six coming up.

  • Monday 7/13: 1:30 – 2:30EST (for ESOP insurance agencies)
  • Monday 7/13: 2:30 – 3:30EST
  • Thursday 7/16: 10:00-11:00EST (for ESOP insurance agencies)
  • Thursday 7/16: 11:00 – 12:00EST
  • Thursday 7/16: 2:30 – 3:30EST
  • Friday 7/17: 11:00 – 12:00EST

If you work at an ESOP-owned NCEO member company and would like to learn more, or if you are an advisor interested on behalf of your clients, please contact Suzanne Vinson (SVinson@nceo.org). If you work for an insurance company that is an NCEO member, please also call so you can learn about participating yourself.