Beyond Buying Insurance: When It Makes Sense to “Own” Your Risk

By Daria Helmer, VP & Strategic Business Advisor, and Kristine Ross, Strategic Business Advisor

Many business leaders simply view insurance as a necessary expense. They pay their annual premium to an insurance carrier and leave it up to the market to determine the value of their risk.

But what if you’re an organization that has invested in safety, improved claims performance and built a strong culture around managing risk? At some point, it may be worth asking a different question: Should we continue paying someone else to take all of our risk, or are there risks we’re prepared to own ourselves?

Enter: captive insurance.

It might not be the right fit for everyone, but captives can reward organizations that understand and actively manage their risk.

The Strategic Shift from Buying Insurance to Financing Risk

In simple terms, a captive allows an organization to retain and finance a portion of its own risk rather than transferring all of it to an insurance carrier. It issues policies, collects premiums, and pays claims.

Instead of paying a traditional carrier to assume every dollar of risk, an organization participating in a captive takes on more of the predictable losses itself, while typically using traditional insurance or reinsurance to protect against larger, potentially catastrophic events.

If losses perform better than expected, the organization may participate in the financial upside. If they perform worse, they have more skin in the game.

It’s a fundamentally different way to think about insurance, and it’s far from a fringe strategy. As of 2026, approximately 90% of Fortune 500 companies have captive subsidiaries, according to the National Association of Insurance Commissioners (NAIC). AM Best also reported in 2026 that net premiums written by the U.S. captives it rates have grown 65.5% over the past five years.

Maybe most interestingly, that growth has continued even as capacity and pricing have improved in portions of the traditional commercial insurance market.

Why? Because for many organizations, the captive conversation isn’t simply about finding cheaper insurance. It’s about gaining greater control over how risk is financed.

Captives Aren’t a Financial Shortcut

When it comes to captives, there’s an important catch. A captive just isn’t a way around expensive insurance.

When you retain more risk, your losses matter more. A serious accident, poor claims management, or deteriorating loss performance doesn’t simply become the insurance company’s problem – it becomes yours.

That changes the conversation around risk management and puts more ownership on the organization.

Investments in workplace safety, loss prevention, claims management, training, and other risk controls aren’t just things that might help at renewal. Those factors can have a direct connection to the long-term financial performance of the organization’s risk-financing strategy.

So, the bottom line remains thatcaptives can reward organizations that understand and actively manage their risk,but you have to be willing to do the work.

Better Risk Creates Better Options

GKG’s philosophy is simple: insurance should be one component of a broader risk strategy, not your entire risk strategy itself.

The traditional insurance process can become overly focused on the annual renewal: What will the carrier charge? Can we get another quote? Can another insurance company save us money?

Those are fair questions. But they’re not the only questions businesses should be asking.

Our Far From Ordinary approach to managing risk starts further upstream. We’re asking businesses to think about:

• What’s driving our losses?
• Which risks can we control?
• Which risks should we retain?
• Which risks could seriously threaten the organization and need to be transferred?
• And are we financing all of those risks in the smartest way possible?

For some organizations, the answer may eventually include a captive. For others, traditional insurance remains the right solution. Higher deductibles, different retention structures, or other alternative risk-financing strategies may make more sense for others.

The goal shouldn’t be to get into a captive. The goal should be to manage your risk so well that you have choices.

If the Captive Shoe Fits

There’s a reason we don’t believe the captive conversation should begin with, “How much money can this save us?”

Captives require organizations to take on additional risk and financial responsibility. Depending on the structure, there may be capital requirements, governance responsibilities, greater exposure to losses, and a need for long-term commitment.

An organization with volatile losses, weak risk controls, or little appetite for retaining risk may be better served by the traditional insurance market. Even organizations that appear well-suited for a captive need to understand what they’re getting into.

That’s why we do believe a captive should be the result of a strong risk strategy, not a substitute for one.

Are you ready to “own” your own risk?

The growth of captives points to a larger shift in how sophisticated organizations think about insurance.

They’re looking beyond, “What does my policy cost?” They’re asking, “What is our total cost of risk, and what can we do about it?”

That mindset matters whether your organization ultimately joins a captive or never considers one at all, because the real opportunity isn’t simply finding a different place to put your insurance premium. It’s understanding your risks, improving the ones you can control, and making deliberate decisions about the ones you want to own.

Captives can reward organizations that do that exceptionally well. But they’re not right for everyone.

The better question isn’t, “Should we be in a captive?”

It’s: “Are we managing risk well enough to give ourselves more choices?”

If you’re not sure how to answer the question above, reach out to our team. We can help you look at your broader risk picture to evaluate whether a captive program or another solution might be the right fit for your organization.