Captives remain a large untapped market for Alberta brokers. They provide benefits through greater control of claims and books of business, but short-term drawbacks such as financial strain, a captive insurance professional said Sunday during an industry event.
Captive insurance is a licensed insurance company that an insured owns to self-insure their risks. They offer greater control over claims and premiums, but come with short-term financial and resource strain, says Whitney Benson, founder and chief operating officer/chief technology officer at CaptiveSimple.
“Captives offer your clients the opportunity to control their claims in a way that best suits them,” she says during Insurance Brokers Association of Alberta’s (IBAA) Convention 2026 in Banff. “And the biggest thing of all is that captives also afford your clients the opportunity to have 60% of their premiums returned to them,” through a loss fund.
Benson reports captives boast a 99% retention rate, with $1.2 billion available in the addressable market in Canada. “That’s commercial premiums that could be written into captives.”
She adds captives are in it for the long-run and each captive needs premiums in excess of $250,000. Traditionally, coverages placed into captives include commercial property and liabilities.
Claims advantage
From a claims perspective, captive owners hold control traditionally held by carriers. For example, usually when a claim happens, a carrier decides which adjuster or vehicle repair shop to use.
“In the world of captives, the captive owner has that control,” Benson says. “They can make those decisions, and through that, they have greater financial stability.
“[Captive owners] also control their premiums, since those premiums are reflecting their claims, their business alone, not in the industry as a whole.”
Likewise, captives on the broker side do not need to worry about carriers’ risk appetite next year when renewal occurs, or rate increases that are coming down the pipe, Benson says. “You don’t have to worry about how the claim is going to be handled, so you have a greater control for that client.”
Short-term pain for long-term gain
But brokers may say, “So, I’m going to place all this business into the captive, and I’m a producer and I make 100% commission, so then what? And what’s going to happen to my brokerage when my book of business drops?
“Well, that’s one of the drawbacks,” Benson says. “But as you’re building out that capacity over here in the captives, you are going to have to build out capacity, back in that traditional commercial sense.
“You are going to have to take on a little bit of hardship,” she adds. “It can be a very difficult and expensive first year, but that return on investment in the long run, that revenue stability, is worth it in the end.”
Brokerage captive owners may also need to spend money on education or shifting their culture from policy-selling to becoming strategic risk advisors, Benson says.
“There’s a role shift there, and that takes time and that takes money as well,” she says. “So, it can be a huge strain on resources.”
Alberta’s regulatory framework enabling captive insurance companies became effective July 1, 2022, making it the second province (after British Columbia) to allow formal captive insurance domiciles.