Captives can seem complex, unfamiliar, and risky, which can lead many agents to avoid the topic altogether with their clients. Unfortunately, this hesitation leaves your clients stuck in the same overpriced, restrictive traditional insurance plans year after year. This can lead to your clients looking for other alternatives. Alternatives another broker is likely to have. You don’t want to ignore captive insurance, especially when it can affect your book of business.
By the end of this article, you’ll understand why most agents don’t discuss captives, the misconceptions holding them back, and how you can overcome these challenges to better serve your clients.
1. Captives Feel Unfamiliar. That’s a Problem.
Most agents don’t discuss captives because they simply don’t understand them. Captives require a different approach that isn’t covered in the traditional market. This lack of education leads to hesitation and, in many cases, outright avoidance of the subject. And your clients will look into captives if you avoid the subject.
What You Need to Know:
- Captives aren’t as complicated as they seem. With the right training, you can explain them to your best clients with the confidence to maintain your book of business.
- Avoiding captives limits your ability to serve clients looking for better options.
2. Fear of Losing Clients to Competitors
Many agents worry that if they mention captives, their clients will look elsewhere for answers. They fear that larger, more specialized firms will swoop in and take business away.
What You Need to Know:
- Clients are already searching for alternatives. If you’re not discussing captives, another agency will.
- You’re in control when you’re the one having the proactive conversation. If you’re the one presenting the option, your clients take notice of your credibility.
3. Misconceptions About Risk
One of the biggest myths about captives is that they’re too risky. Many agents assume that captives are only for massive corporations or that they require a level of financial commitment their clients can’t handle. This isn’t the case. If your clients spend $250,000 or more on insurance premiums annually, they potentially qualify for a captive.
What You Need to Know:
- Captives come in different structures, including group and cell captives, which allow smaller businesses to participate.
- Properly structured captives reduce risk rather than increase it, offering stability in unpredictable markets.
Wondering if a client qualifies for a captive? Use our captive assessment tool to see how your best clients would perform.
4. Captives are an Upfront Investment for You and Your Clients
Captives involve higher upfront costs, both in time and money. For agents, they take a little time to learn. For clients, there’s an initial capital investment. This can make them a harder sell compared to traditional insurance.
What You Need to Know:
- Yes, captives require investment, but they lead to long-term savings, control, and transparency over time. Clients can see themselves earning underwriting profit and cash flow through captives.
- Captives are a long-term financial strategy. Agents who understand captives can position them as a strategic, cost-saving tool rather than a financial burden.
5. Compensation Models Make a Difference
Traditional insurance pays agents through commissions. With captives, the compensation model shifts, sometimes requiring agents to rethink how they structure their revenue.
What You Need to Know:
- Captives provide transparency on every cost, which clients appreciate.
- Agents who embrace captives can create a more predictable, recurring revenue stream.
What This Means for You and Your Book of Business
Captive insurance remains a blind spot for many independent agents. It’s unfamiliar, perceived as risky, and requires a shift in approach. The truth is avoiding captives limits your clients’ opportunities for better coverage, cost savings, and control.
Understanding captives, bringing them into the conversation as an alternative for your best clients, and addressing misconceptions make it so you can provide more value, stand out from the competition, and build a stronger, more profitable book of business.
Next, read our Captive Insurance 101 Guide for independent agents to be introduced to captives.
Captive Coalition’s sole purpose is to help independent agents curious about insurance alternatives understand captives. We’ve helped them confidently introduce captives to their clients, expand their book of business, and create a competitive advantage in the market.
Ready to learn more about captives? Become a member of Captive Coalition for FREE to have access to more resources, training, and webinars!
