Captive vs Traditional Insurance for DSPs
How a group captive differs from a traditional policy, what to ask before your renewal, and a free review where a licensed agent quotes your account with real carriers.
How the two structures differ
| Group captive | Traditional policy | |
|---|---|---|
| Who carries the risk | Members share losses through the captive; your results and the group's results both matter. | The insurance carrier carries the risk; you pay a premium and the carrier pays covered claims. |
| Cost over time | Can return underwriting profit as dividends in good years; can require extra contributions in bad years. | Premium is set at each renewal from your own loss history and the carrier's rates. |
| Collateral and capital | Often requires collateral or capital contributions that are tied up while you're a member. | No collateral in most programs; you pay premium and any deductible. |
| Leaving | Exit terms vary; check how and when collateral and dividends are returned. | You can shop or move at renewal. |
Which one costs less depends on your own loss history, fleet and the terms of your program, so the only reliable comparison is a real quote against what you pay today.
Questions to ask before you renew
- Have you received any dividends, and how were they calculated?
- How much collateral or capital do you have in the captive, and when would it be returned if you left?
- Are your limits and coverages the same as what your contract requires?
- What did the last three renewals cost, per vehicle?
- Can you get your loss runs today? A carrier will need them for a quote.