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Our mission at the NCEO is to help employee ownership thrive.  Part of that mission is to provide our members with resources that allow them to build stronger organizations, and we are constantly looking for innovative solutions. The NCEO is deciding whether to offer a captive insurance program as a possible new member benefit. We are currently communicating the benefits of a captive to our membership, and we’re inviting any potentially interested member companies to learn more on this page. We invite you to take a look at the material we have put together and reach out with any questions.

The goal is for NCEO members to get better insurance coverage by setting up a “captive insurance” company with other NCEO members. A captive insurance group is a group of companies that form together to self-insure for any insurance need, most commonly health and/or commercial and property. The captive insurance company would be an insurance company owned and controlled by the employee-owned companies that form it.

Unlike normal insurance, which the companies pay for through an agency, captives use their own resources to cover insurance costs. Captives normally buy stop-loss coverage to protect against atypically high expenses (such as a $100,000 deductible per employee). The members of the captive insurance group form the board of the captive insurance company and meet, usually annually, to decide on any policies. You can learn more in this video.

A Better Way Forward Group Captive Insurance - Presented by Scott Insurance




What are the potential advantages?

The argument for captives is that their members can avoid some of the intermediary costs of buying insurance. Members also control the insurance company, rather than negotiating with a third party. They also have an incentive as a group to share and find ways to reduce insurance expenses, such as by encouraging wellness.

Read the article in the May/June Member Newsletter: Own Your Risk: Exploring the Benefits of Captive Insurance

If members of the captive keep their insured costs down, the savings go back to its members. When successful, captives might reduce premiums by 10% to 25%.

Captives allow ESOPs to reduce their insurance cost in addition to the following benefits and advantages: 

  • Control and transparency over the insurance process
  • Access to Fortune 500 resources
  • Return of underwriting profit and investment income
  • Stabilize insurance costs, avoiding the big insurance market cycles
  • Asset Protection and access to lower reinsurance costs

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What kinds of companies are captives best suited for?

Companies in captives are usually in the range of 75-300 employees and annual revenues greater than $20 million. Smaller companies have too much variable risk (one person can account for a major percentage loss) and larger companies can self-insure on their own.

What types of insurance are included?

Captives can exist for many types of insurance, but we are currently exploring two types of captive insurance programs, one focused on health insurance and the second focused on workers compensation, general liability, and automobile coverage.

What’s the connection to employee ownership?

Although many captives are specific to an industry or a geographic area, the NCEO believes that employee-owned companies may be strong candidates for captive insurance. There are three reasons:

Employee-owned companies have better-than-average risk profiles.

  • ESOP companies are more likely to be well run and to have long-tenure employees. Many are more generous with benefits, more attuned to wellness and safety, and at the same time, want to control costs for everyone’s gain. Arguably, ESOPs may have a better outcome on health metrics than non-ESOP companies. Research shows that low work satisfaction, wealth insecurity, and a sense of unfairness are strongly linked to stress levels, which in turn are strongly linked to health outcomes. The commercial and property case is less certain, but employees who take care of the business may lower these costs too.

Employee-owned companies are diversified.

  • Forming a captive insurance with a group of companies from diverse industries and various parts of the country reduces the chances of correlated risks among the pool of companies being insured, making the threat of a catastrophic year less likely.

Employee-owned companies benefit from sharing profits and controlling their insurance.

  • Captive insurance programs will provide our members with more control and transparency over their insurance programs. We expect that the NCEO captives will provide long-term cost savings to our members and allow them to retain more of their annual premium each year. 

  • Any profits of the captive would be returned to the member companies, and the member companies would constitute the board of the captive, giving them control over its policy choices.

  •  Additionally, members will have access to Fortune 500 resources and sharing of best practices which will ultimately will drive value to their ESOP. 

More FAQs from Chad Duke of Scott Insurance

Who is providing the expertise?

An ESOP-owned agency, Scott Insurance, is working with us to explore this possibility. They welcome participation by other insurance agencies (please contact Suzanne Vinson at to inquire).

What are the next steps?

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 ( If you work for an insurance company that is an NCEO member, please also call so you can learn about participating yourself.

What are other ways can I learn more?

  • Read more FAQs from Chad Duke of Scott Insurance
  • Contact Chad Duke of Scott Insurance to schedule a meeting,

  • Contact Suzanne Vinson at the NCEO,