How Brokers Are Winning with Captives

This article originally appeared in Captive International.

As insurance brokers and consultants, you have a finite amount of time and energy – your days are a whirlwind of client issues, prospecting, and navigating the cycle of RFPs. You’re rightly focused on nurturing your book and providing solutions, not necessarily on changing up the model altogether. But a big change is happening in risk management, and it presents a threat to your client relationships as well as an excellent opportunity for growth.

The rise of captive insurance is letting more companies take control of their risks while “betting” on themselves and reaping the rewards of good loss performance. If you prepare yourself for the captive conversation or even better, go on the offensive and use it to prospect, you’ll reach your clients on this key topic before a growing set of competitors do.

Becoming savvy on captives and recognising them as a tool rather than a threat can make the difference between trust lost and trust gained and enhance your business. It puts you in an insiders’ group of providers who are adept in alternative risk. Let’s dig deeper.

Retention Is the Word

Many of your clients have heard about captives, or will soon. When a competitor approaches them with a captive strategy that can lower costs, smooth out claims volatility, and turn expense into profit, you will be caught in the difficult position of having to either defend your current offering or play catch up. In fact, we’ve heard from senior producers that if they can’t deliver a captive for a well-qualified client, Marsh or Aon absolutely will.

In other words, being able to provide captive solutions has become non-negotiable. Setting aside the defensive necessity, you can stand out as an advisor by being the one who brings this idea to your clients first. Better they learn about it from you and get to collaborate with you on assessing its viability.

But the retention story doesn’t stop there. If your client does decide to utilize captive insurance, that relationship can become extremely sticky. Instead of “renting” their insurance, they will now own a piece of it. Ownership means investment. By guiding a client into a well-structured captive, you create an arrangement that can be lifelong.

From Vendor to Indispensable Partner

Beyond protecting your book, captives reinforce your role as a strategic partner, not just a service provider. You want to help companies thrive, and a captive is one of the most powerful financial tools you can offer. This is a C-suite and boardroom topic, moving you from discussions with HR to strategic planning with the CEO and CFO.

Picture being the advisor who shows a client how to pay less to an insurance carrier and instead build a flexible asset that grows over time. You are the one providing a mechanism to fund and control their own risk, giving them stability in a hard market and the ability to reinvest in their business. When you bring this level of value, you are less likely to compete cycle to cycle on price. You are integrated into your client's long-term financial plan as an essential and trusted advisor.

You Don't Need to Be the Expert

The primary hesitation for most brokers is the perceived complexity. You don't have time to become a captive expert overnight. Luckily, you don’t have to. Your role is not to master the details of structuring, formation, licensing, regulations, and implementation. Your role is to identify the opportunity and work with partners to help present it to your clients.

The aperture for captive suitability is widening, such that what felt impossible a few years ago is now within reach. Even hard-to-place risks like CAT/Property are well-suited to a captive, if structured properly. For clients in need of alternative options, being in a position to deliver this good news could be game-changing for your relationship.

At Luzern Risk, we bring an end-to-end product solution that keeps you in charge. We work as your alternative risk speciality team, handling the heavy lifting while you maintain and strengthen the client relationship. Our tech-forward approach gives you and your clients a command centre, or one-stop-shop, for all things related to your captives – centralizing the information, analysis, reporting, and process management into one easy-to-use platform.

And we are fully independent, so incentives stay aligned and you remain close to the relationships you have spent meaningful time cultivating.

Voluntary Benefits as an Entry Point

The flexibility of captive insurance is one of its greatest strengths. Almost any type of risk can be covered, for any class of business. But let’s zoom in on one example that highlights how alternative risk can support brokers’ role as thought partners, unlocking value that clients may not have known was there.

A Voluntary Benefits (VB) captive is a brilliant way for a client to dip their toe in the water with a familiar set of products they are likely already offering. Instead of letting a carrier collect all the profit from products like accident, critical illness, or hospital indemnity insurance, a VB captive allows your client to retain that underwriting profit and investment income. This creates a new surplus stream from a program that previously generated none.

A VB captive plays well with other captive offerings that could exist in an ecosystem for your client. The profits generated in the VB captive can be used to offset risk elsewhere, such as cushioning potential losses in a future Medical Stop-Loss captive. That synergy makes the transition to risk retention more approachable.

What Are You Waiting For?

Participation in captives is growing rapidly, driven by challenges in traditional insurance and increased awareness of how alternative risk can support and align with business goals. Insurance brokers can use this shift to retain clients, bring greater value as advisors, and gain experience in a key segment of the industry.

One of the most common things we hear brokers say is, “If I don’t figure out how to have the captive conversation with my clients, someone else will.” If you are ready to pre-empt the captive discussion rather than be caught flat footed, Luzern Risk is available as a resource to help you assess the opportunities in your book and position you to win.