Captives: Why the Right Companies Are Leaning In & Why Now Is the Perfect Time

Written by: Cottingham & Butler Food & Agribusiness Group

For many mid‑market food, ag, and processing companies, the traditional insurance market has become increasingly unpredictable - particularly on the casualty side. Rising rates, tightening underwriting, and inconsistent carrier appetite have pushed more organizations to look for long‑term stability. That’s why captives have rapidly grown as a strategic alternative. 

Is My Business a Captive Fit? 

While captives can fit many industries, the companies that benefit most share a few characteristics: 

1. Strong Safety Culture & Operational Discipline 

Organizations with established safety practices, management consistency, and year‑over‑year loss control improvement tend to outperform industry averages. That performance is what allows captive members to pay premiums based on their own results, not the volatility of the broader market. 

2. Mid‑Sized to Large Premium Spends 

Companies with meaningful GL, Auto, WC, and APD spend - typically $300K+ of combined casualty premium - have enough scale to capture real value from loss‑sensitive structures. 

3. Desire for Transparency & Control 

Captive members gain control over claims management and have great visibility of performance benchmarking, and capital flow. For companies that desire more say in claims management and adjustment, captive models offer superior insight and control that is not possible with guaranteed‑cost programs. 

4. Long‑Term Thinking 

Captives reward consistency. Members who plan 3–5 years ahead often see the greatest financial upside. 

What Are the Benefits of Joining a Captive? 

1. More Stable, Predictable Pricing 

Traditional carriers keep raising rates, especially auto coverage - even for companies with clean loss of histories and no claims. In the standard market, good operators are unfairly penalized and end up subsidizing poorer performers, driving costs higher regardless of individual results. Meanwhile, captive members have broken this cycle, consistently outperforming and achieving better outcomes than those stuck in the standard market. Captive performance across the board outperforms the standard market significantly. The example below shows captive performance of one of C&B’s groups over the past 5 years. On average, the captive is outperforming the standard market on an annual basis by 5.2% on WC, 12.68% on GL, 9.35% on AL & 4.52% on APD. 

2. Return of Underwriting Profit & Investment Income 

Unlike guaranteed‑cost programs - where the carrier keeps every dollar not spent on losses - captives allow members to recapture excess premium, earn dividends, and build equity over time.  

3. Peer Benchmarking & Best‑in‑Class Community 

Captive membership connects similar best-in-class operators to one another, allowing companies to benchmark their safety, claims, and operational performance against industry peers - not generic national averages. 

4. Excellent Safety and Ability to Improve Loss Experience  

The right captives are proven to help control losses because the insured owns the risk. That ownership drives stronger safety accountability and more disciplined claims management, with earlier intervention, better control over medical and legal outcomes, and a focus on preventing repeat losses - ultimately lowering both frequency and severity over time. 

Why Now Is the Right Time to Explore Captives 

1. The Casualty Market Isn’t Normalizing Anytime Soon 

Auto liability and excess/umbrella remain some of the most distressed lines in commercial insurance, driven by nuclear verdicts, social inflation, and persistently elevated carrier loss ratios. The result is continued rate pressure, tighter terms, and reduced capacity - with little relief in sight. While much of the market is absorbing these increases, captive participants have avoided the worst of the volatility, benefiting from pricing stability and outcomes tied to their own performance rather than broad market dislocation.   

Captive Case Study: Member's Rate Change Since Joining Captive in 2021

• Work Comp: -41.85%

• General Liability: -44.38%

• Auto Liability: -41.55%

• Auto Physical Damage: +7.27%

2. Better Predictability in an Unpredictable Market 

Captives also bring predictability to an increasingly unpredictable environment. For companies fatigued by annual market swings, captives offer control over pricing, transparency into where dollars are actually spent, and the ability to benefit directly from strong safety and claims performance. As traditional carriers continue to narrow underwriting appetites, high‑performing organizations are increasingly grouped with weaker risks and priced accordingly. Captives break that pattern - you are judged by your results, not the market’s problems. 

3. Increased Carrier Restrictions Create More Opportunity 

As traditional carriers tighten underwriting appetites, high‑performing companies are unfairly grouped with weaker risks. Captives break that pattern. For disciplined food and ag organizations with strong operations and a real safety culture, a captive isn’t just another insurance option—it’s a strategic advantage. The traditional market was never designed to reward top performers.  A captive change that dynamic by turning risk into a long‑term financial engine that rewards control, accountability, and consistency. 

Final Thoughts 

A captive gives you something the traditional market will never offer: 

• Control over your cost of risk instead of absorbing whatever increase shows up at renewal 

• Transparency into how your dollars are used, instead of dealing with pricing that feels arbitrary 

• The ability to capture underwriting profit, not donate it 

• A long-term financial engine that rewards strong safety performance instead of penalizing you with market-wide averages 

• Stability when the commercial market is anything but stable 

If your organization is performing at a high level and you are committed to continuous improvement, it’s time to flip the script on the traditional insurance model. A captive puts you in control and can become a long-term profit center for your business.