Redefining Renewals: Why Captives are Taking Center Stage

As we head into 2025, there’s no denying that the industry has undergone its fair share of challenges already. A new administration isn’t the only tumultuous change this year—already, severe weather disasters, challenges in the property insurance sector, and the growing role of artificial intelligence (AI) have wreaked havoc in the insurance industry, uprooting plans and leaving the market riskier than ever. Catastrophic events from natural disasters such as fires, hurricanes, or floods, have gone from one-in-100-year occurrences to one every five or so years. As a result, traditional insurance markets are feeling an enormous strain from the cost of insuring those events.

And we’re only in January. As the challenges continue to stack up, the need for a solution grows just as quickly. With all the advantages they offer, captive arrangements can prove to be just that—firstly by offering some much-needed stability.

Stability

Captives provide stability for self-funded health plans in an unpredictable claims environment with a new administration, making them an appealing option. In a captive arrangement, organizations are able to control their premiums, risk management strategies, and claims experience, allowing them to avoid the volatility of the traditional insurance market. retaining risk within the organization, they can build reserves and customize coverage to meet the specific needs of their employees—which brings us to our next point.

?Flexibility

Another reason captive arrangements are growing in popularity is that they offer a key strength to payers—flexibility. Unlike traditional insurers, captives allow for a greater level of flexibility in both risk management and plan design. This adaptability helps mitigate risks and stabilize the financial trajectory of the health insurance program. Since the captive is owned solely by the organization, it gives them direct control over their health plans. This autonomy allows them to tailor plans specifically for their employees, with a focus on preventive care, wellness, and health optimization—all of which can lead to better long-term health outcomes for their workforce. ?

?Cost-Containment Potential

?Of course, you can’t talk about insurance solutions without mentioning a primary draw—cost-containment. As prices in the healthcare system continue to soar, cost-effective solutions are becoming more and more of a necessity. Single-parent captives offer an ideal solution, giving organizations a way to avoid the high premiums and unpredictable cost increases of traditional insurance models. By setting up a captive, organizations gain more control over their healthcare plans, resulting in more predictable costs. Additionally, as we mentioned earlier, the flexibility of captives can allow for better management of employee health—which can directly result in lower healthcare costs.

Looking to the new year, it’s already clear that the road ahead will be anything but calm. As the insurance market faces continued changes, turning to a captive can provide a rare stability. Along with flexibility and cost-containment potential, it’s no wonder that captives are set to grow even more in 2025. With our captive insurance, RMTS is already ahead of the game, with tried-and-true solutions to help you handle whatever the market throws at you next.

Learn more about how a captive solution can help you: https://rmts.net