Middle market business owners and decision-makers are more open than ever to solutions that give them greater control over their insurance costs. While guaranteed cost programs remain the default option, they often lack the flexibility and long-term savings that high-performing businesses crave. That’s where captive insurance comes in—a powerful but often misunderstood tool that enables clients to turn insurance from a sunk cost into a strategic asset.
Independent agents are perfectly positioned to bring this solution to their best clients. But doing so requires more than surface-level knowledge—it requires confidence, clarity, and a roadmap. In this post, we break down a recent conversation with Warren Cleveland, founder of Captive Coalition, to uncover how agents can lead with captives, retain top accounts, and drive profitability for both their clients and their agencies.
Captive insurance allows a business to become its own insurance company by funding its own losses through a controlled structure, often with shared risk among like-minded peers. Yet many agents avoid the topic due to perceived complexity or lack of training.
“The captive is not the answer to help them get better—it’s the reward for already being good.” – David Carothers
Not understanding how captives work can be the difference between keeping your largest account—or losing it to a competitor who comes prepared. And with so many agents still focused on quoting and renewals, mastering alternative risk transfer strategies is how producers stand out.
Before approaching clients about a captive insurance solution, it’s essential to qualify them properly. Captives are not a fix for poor performers—they’re a tool for those already committed to risk control.
Ideal captive candidates typically:
Red Flags to Watch For:
Traditional guaranteed cost programs may offer predictability, but they also remove an employer’s ability to control long-term costs. Captives, on the other hand, reward operational excellence with reduced premiums and potential profit-sharing.
With captives, premiums are based on actual loss experience, not industry-wide trends. This distinction is particularly valuable in the middle market, where companies often feel unfairly penalized for market-wide claims.
Captives can also accommodate a more tailored risk financing strategy:
One of the most overlooked areas in captive readiness is contractual risk transfer (CRT). If your client is working with subcontractors or vendors, the presence (or absence) of properly executed agreements can drastically affect their claims experience.
“We had a client with $1.2 million in premium and $1.2 million in retained claims—all because of subcontractor agreement failures.” – David Carothers
What to Check:
Agents who can help clients tighten these areas not only reduce their loss exposure but make them better candidates for a captive. For a deeper dive, check out Noel McCall’s contractual risk transfer course, which has helped multiple producers land new business with improved CRT knowledge.
Understanding how a captive is structured demystifies the process and gives agents language to speak credibly in front of clients. Here’s a simplified breakdown:
Key Components of a Captive:
Warren Cleveland’s firm prefers quota share captives because they’re more accessible. For example, an AB captive may require $227,000 in collateral, while a quota share model requires just $50,000 for the same client—making it easier for agents to bring clients in early.
Captive Coalition is built on five core tenets, all of which empower independent agents:
To help agents succeed, Captive Coalition offers a free Learn Membership, which includes:
Agents can sign up at CaptiveCoalition.com/welcome.
“You don’t need to be an actuary—just credible enough to get the conversation started.” – Warren Cleveland
Captives aren’t just good for clients—they’re good for agencies too.
Forward-thinking firms are leveraging protected cell captives under carrier umbrellas, where they contribute a fee (e.g., $50K) to access $1M in underwriting authority for preferred risks. These arrangements allow for additional profit-sharing beyond commission and give agents a chance to practice underwriting and risk selection.
Just remember: these programs are not a license to write everything. They require discernment, training, and a commitment to writing only clean, low-loss business.
Captive insurance is no longer just for Fortune 1000s. With tools like quota share models, improved education, and structured support, middle market producers can confidently bring captives to their clients—often before national brokers ever show up.
If you’re serious about leveling up your conversations, improving client outcomes, and insulating your book from the competition, there’s never been a better time to embrace captives as a core strategy.
Explore your free Learn Membership and
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