August 05, 2014
From John Salisbury, President

Yes, it is possible to form a group captive that specializes in employment practices liability insurance. The challenge is to have prospective insureds with sufficient premium volume and loss history. With that information, a feasiblity study can be performed and a business plan developed for submission to the prospective domicile. Before submitting the business plan, tenative commitments to purchase coverage and provide capital should be secured from the prospective insureds. If capital is a problem, a rent-a-captive may be an option you may want to pursue.

Assuming the captive being formed will only provide liability coverages, serious consideration should be given to forming a risk retention group. The reason is that a risk retention group needs only to be licensed by a single state and subsequently registered in the states where it intends to write coverage. This can eliminate the need for a fronting carrier.

A risk retention group can be created as a stock, mutual or reciprocal insurer.