Not everyone knows the key differences between traditional insurance and Group Captive insurance, and for many business owners, this makes it challenging when deciding which one to go with. No matter what you're in the business of, having the proper insurance that best suits your needs and protects your business is a number one priority. While both methods can benefit your business, there has been a recent trend in people taking the Group Captive route due to its wide range of benefits. 

Keep reading to learn more about the key differences between traditional insurance and Group Captive insurance. 

Pros of Traditional Insurance 

1. Less Work: With traditional insurance, you are putting much of the work onto a third-party company that will deal with claims. This can be helpful for business owners who don't have much downtime to spend on managing insurance. As a business owner, you pay premiums to your insurer, and the insurer will take it from there! 
2. Less Commitment: In traditional insurance, you do not have to make an upfront investment. Whereas in Group Captive insurance you will have to make an early investment in a shared insurance company which can feel like a lot of commitment to some business owners. With traditional insurance, the only commitment you make is paying an annual premium to your insurer. 
3. Financial Protection: There may be a time when your business has to take out a large claim. In a time like this, having traditional insurance may greatly benefit your business because they normally have larger financial resources and will be able to take on big losses. This means that instead of your company taking on a great financial burden, your insurer will. 

Cons of Traditional Insurance 

1. Premium Increases When You Renew: In many cases, traditional insurance can be unpredictable, and your premiums can increase at any time. At renewal, insurers can increase rates just because of market fluctuations. This means that even if your business had a great year with low claims, you would still have to pay raised rates. This is a stressful factor for many businesses because it is incredibly hard to plan for. 
2. Less Control: Since insurers determine most aspects, it can feel like traditional insurance doesn't give you much control over the whole process. This has the possibility of being very frustrating for business owners who like to be involved in every aspect of their business. 
3. Limited Reward: In traditional insurance, you do not earn any type of financial reward for having low claims, besides slightly reducing premiums later on. This can be incredibly discouraging for many business owners, which is why some go with Group Captive insurance because it allows you to benefit from your low claims. 

Now that you understand both the benefits and challenges of traditional insurance, let's explore Group Captive insurance and learn why so many business owners are making the switch. 

Pros of Group Captive Insurance 

1. Control Over Premiums and Renewals: With Group Captive insurance you can rest at night knowing your premiums are more predictable. This is because in Group Captive insurance your premiums are based on the group's risk. Being in a Group Captive keeps you away from the fluctuating market conditions and prevents you from paying high rates. 
2. Greater Potential for Profit: Unlike traditional insurance where you aren't rewarded for having low claims, Group Captive insurance will allow you to earn a profit. If you are a business with great risk management, the extra money from premiums can be given back to group members as dividends. 
3. Opportunity to Customize: Being a member of a Group Captive allows you to customize your coverage. You can design your insurance plan to better fit your business needs. This approach can be much more rewarding since you will be provided with an insurance plan specifically tailored to your business rather than traditional insurance where you are given a one-size-fits-all plan 

Cons of Group Captive Insurance 

1. Start-Up Costs: When joining or starting a Group Captive, there is an initial capital investment you will have to make that can get pricey. While this initial payment can be an annoyance, over time your investment will pay off. If you are a smaller company just starting, then this may not be the best investment for your business. 
2. Greater Responsibility: When you join a Group Captive you are taking on some of the administrative responsibilities that a traditional insurance agency would do. You need to have some sort of expertise in risk management to keep things running smoothly. Joining a Group Captive can also be time-consuming at some points so if you have limited time, Group Captive insurance may not be for you. 
3. Risk: While joining a Group Captive usually limits risk, there is always the chance of an unexpected loss. In a Group Captive risks are shared with the other members in your group. This means that if one member has a large and unexpected loss, then you could end up having to face the consequences of it. 

Whether you end up going with traditional or Group Captive insurance is completely based on the needs of your business. For business owners looking to see more predictability and profit from their insurance then joining a Group Captive is the perfect opportunity. But for smaller business owners, joining a Group Captive may not be something that they are ready for yet, which makes traditional insurance a great option. 

The benefits of joining a Group Captive are very clear, which is why so many people are taking the leap and deciding to put their insurance into their own hands.