SRS Captive Insurance

Group Employee Benefit Captives – All Grown Up

 
April 22, 2019

Captive International, October 1, 2018

In this article in Captive International, Wendy Dine, Associate Director of SRS, discusses the growth in the use of group captive programs for medical stop loss insurance.

While many will debate when the first group employee benefits captive (a.k.a. group medical stop loss captive) was formed, there is no disputing the exponential growth in the use of captives to allow small and mid-size employers to partially self-insure and share a layer of medical stop loss risk in a captive.

Although arrangements can vary from program to program there is certainly one commonality amongst the most successful of structures; the use of cost containment strategies to mitigate high-cost claims, overutilization or billing errors, not only in the captive layer, but within each employer’s self-insured retention as well.  All too often there is a main focus on the need to achieve critical mass in order for a program to be successful, and while this is an important element, the need for cost reduction strategies is just, if not more, important.

How are programs reducing claim costs and bending the medical trend curve?

Medical management, concierge services, reference-based pricing, direct contracting, medical bill review, not to mention controlling specialty drug spend…  There’s certainly no way to touch on all the approaches being used today, but the industry has seen positive results from several to be discussed here.

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