How manufacturers, healthcare providers, energy firms, retailers, and transportation companies are using captives to control costs, tailor coverage, and manage risk.

In today’s volatile insurance market, more businesses are exploring alternative risk options—and captive insurance is leading the way. A captive insurance company is an insurance company created and owned by a business to insure its own risks. This allows the business to retain underwriting profits, customize coverage, stabilize premiums, and gain more control over its insurance program.

While companies across nearly every industry can benefit from a captive, there are five sectors that consistently stand out as particularly well-suited for this structure. These industries face unique and often complex risks that traditional insurance policies may not adequately address. As a result, forming a captive allows them to create more efficient, cost-effective, and strategic risk management solutions.

1. Manufacturing and Construction

Manufacturers and construction firms deal with a wide range of risks on a daily basis, from property damage and equipment breakdown to product liability and workers’ compensation. Traditional insurance can be costly and inconsistent, especially when a business has a complex claims history or when it operates across multiple states or countries.

By forming a captive, these businesses can better manage and finance risks, leading to long-term savings and improved cash flow. Captives also allow for customized policies that address niche exposures, such as contractual liability, warranty programs, or supply chain interruptions—areas where commercial carriers may offer limited options or costly premiums.

2. Healthcare and Pharmaceuticals

The healthcare and pharmaceutical industries face some of the most intense regulatory scrutiny and highest liability exposure of any sector. Medical malpractice, employee health benefits, cyber liability, and regulatory fines are just a few of the risks healthcare organizations must manage. For hospitals, physician groups, and pharmaceutical companies, these risks can create major financial pressure and coverage challenges.

Captive insurance offers these organizations a way to better control their costs and tailor their coverage to their specific needs. Many healthcare captives write malpractice coverage, but they can also be used to fund employee benefit programs or provide protection against government audits and compliance violations.

3. Energy and Utilities

The energy sector, including oil and gas, utilities, and renewable energy firms, operates in a high-stakes, high-risk environment. Risks such as environmental damage, equipment failure, and catastrophic events are often difficult or expensive to insure through traditional means. In some cases, companies may even find certain types of coverage unavailable on the commercial market.

Captive insurance gives energy companies the flexibility to insure these hard-to-place risks while reducing their dependency on external insurance markets. Additionally, energy firms can use captives to support environmental liability coverage, worker safety initiatives, and business interruption risks. With the challenge of energy transition and regulatory changes, captives also provide a platform for companies to innovate and respond quickly.

4. Retail and Consumer Goods

Retailers, especially those with multi-location operations, and consumer goods manufacturers are exposed to risks ranging from property damage and theft to product liability, cyber threats, and supply chain disruptions. The COVID-19 pandemic exposed the limitations of commercial insurance in covering business interruption and contingent risks.

For these businesses, captives offer the ability to take control of their insurance strategy. They can build tailored policies that reflect the real risks they face and reduce their total cost of risk over time. Captives are especially valuable for large retail chains managing hundreds of employees and locations, as they can also fund employee benefit programs, helping to attract and retain talent in a competitive marketplace.

5. Transportation and Logistics

Companies in the transportation and logistics space, which includes trucking firms, freight carriers, and warehousing businesses, regularly face auto liability, cargo damage, workers’ comp claims, and regulatory exposures. These risks are not only frequent but often severe, making insurance a major line item on the balance sheet.

Captive insurance enables these businesses to stabilize their insurance costs, gain access to reinsurance markets, and improve their claims handling process. A captive can also track and analyze claims data more effectively, which helps these businesses implement loss control measures and improve safety outcomes. For companies with large fleets or expansive geographic coverage, a captive can be a key strategic advantage.

Why Captives Work for These Industries

Across these five industries, the most common threads are complex risks, high insurance costs, and a desire for greater control over coverage. Captive insurance empowers companies to take a more proactive role in their risk management strategies. It also provides financial benefits, such as the ability to control costs and retain underwriting profits.

Of course, forming a captive isn’t the right move for every company. It requires careful planning, regulatory compliance, and a long-term commitment to sound risk management. But for businesses that meet the financial thresholds and have the right risk profile, captives can be a powerful tool for turning insurance into a strategic asset rather than a recurring expense.

Is a Captive Right for Your Industry?

If your business is experiencing increasing insurance premiums, limited coverage options, or greater risk complexity, it may be time to explore whether a captive insurance company could help. By working with an experienced captive manager like RMC Group, you can evaluate the feasibility and benefits of this approach for your organization’s unique needs.

For more information on if a captive is right for you, read here. Or schedule a meeting with one of our Captive Consultants to get started.