There is no question that we continue to face a “hard” insurance market. With increases in catastrophic weather events and plaintiff attorneys securing ever-larger “nuclear” jury verdicts, insurance carriers continue to respond with steep price increases, dramatically larger deductibles and lower coverage limits. However, not all the news is bad. Sophisticated insurance buyers are turning this instability into a competitive advantage by strategically utilizing captive insurance companies. At a high level, a captive is an insurance company that is owned and controlled by an organization to insure its own large risk exposures, such as auto, general liability, property and workers’ compensation. In essence, a large insurance buyer becomes an insurance carrier for its own risks. One reason captives are appealing is because they allow businesses to avoid the cyclical and transactional (and frustrating) nature of the insurance industry, where pricing is often determined by overall industry performance (“class underwriting”), instead of based upon the loss/claims performance of your individual business. In addition to better and more consistent pricing, captives can further drive down your company’s total cost of risk by enabling you to reap the rewards of your strong claims history. The better your loss/claims performance, the larger the “dividends” you receive back from the captive. There is potential for downside in a captive if you are unable to control your claims performance, however, making it imperative to have a strong safety and claims management culture. Although captives have been used for decades, many organizations have trouble understanding which captive options are available to them and how to evaluate those options. Part of the confusion stems from different types of consultants trying to steer companies into a specific captive product, which may or may not be the best solution for that particular organization. This can result in the classic “square peg in a round hole” misfit. Graham Company is different. We pride ourselves on being a truly independent consultant. With access to domiciles across the United States and the Caribbean, our goal is simple: To help you determine if a captive is right for your organization, and if so, to find the captive option that best meets your individual needs.