May 2026
A single-parent captive – established by a parent organisation to insure or reinsure the risks of its owner or affiliated entities – is the most traditional form of captive insurer. As the reader may appreciate, captive insurers take many other forms, including group or association captives, which are regulated insurance companies owned and controlled by organisations that come together to pool their premium contributions, capital, and risk, within a single vehicle. The members are typically unrelated entities that share a common industry, risk profile or strategic objective.
The fundamental objective of a group captive insurer, like any other captive insurer, is to retain and manage risk through a dedicated regulated vehicle, affording greater control over the insurance programme, direct access to the reinsurance market, and the ability to tailor coverage to specific needs. However, it is the collaborative approach to risk financing that may yield greater results in the context of a group captive. By pooling capital, diversifying risk, and leveraging collective purchasing power, a group captive can deliver greater capacity, stability and coverage.
Bermuda, with its mature but flexible regulatory framework, depth of service provider expertise, and track record for innovation, provides the ideal domicile for group captive solutions.
Group Captives Explained
Unlike a single-parent captive, where one corporate group bears the risk but reaps the reward, a group captive distributes both the burden and the benefit amongst its members. Several structural variants exist within the group captive category. An association captive is formed by members of a trade association or professional body. An industry captive brings together organisations operating in the same sector — for example, healthcare providers, energy companies, or automotive and manufacturing industries — to address risks that are specific to their field.
Regardless of the subset of a group captive, effective governance will be essential. Group captives are typically overseen by a board of directors drawn from its members. Membership criteria are established at the outset and enshrined in the captive’s bye-laws, setting out eligibility requirements and protocol for the admission of new members and the exit or removal of existing members. Much work and effort will go into such terms, given it is important to establish sufficiently stringent membership criteria and align the interests of all members who invariably will differ in their risk appetites, investment preference and strategic objectives.
Premium contributions are calculated based on each member’s individual risk profile and most recent loss history, rather than broad market trends (typically resulting in reduced insurance premiums). Surplus generated by the captive may be retained to strengthen reserves, returned to members in the form of dividends or distributions, or deployed to expand the captive’s capacity. Conversely, in the event of adverse loss development, members may be required to make additional capital contributions, and the mechanisms for allocating such calls are typically set out in the captive’s bye-laws and any shareholder agreement.
Importantly, the group captive model enables its members to enter lines of business that would be uneconomical for a single-parent captive to underwrite alone. Mid-sized automotive or trucking companies, for example, may lack the data, expertise, and capital to establish a standalone insurance programme, but may be able to participate in a group captive that pools risk across a diverse membership base.
Why Bermuda?
Bermuda’s credentials as a captive insurance domicile are well established. The jurisdiction is home to hundreds of captive insurance companies, ranging from small single-parent vehicles to large, sophisticated group structures. Several features of the Bermuda market make it a particularly compelling choice for group captive formations.
First, the regulatory framework administered by the Bermuda Monetary Authority is both rigorous and proportionate. The Insurance Act 1978 and its related regulations provide a clear and well-understood legal basis for the incorporation, licensing and operation of captive insurers, whilst the Bermuda Monetary Authority’s risk-based supervisory approach ensures that regulatory requirements are imposed based on the nature, scale, and complexity of the business being conducted. For group captives, this means that the regulatory burden is commensurate with the risk, without imposing the one-size-fits-all requirements that may apply in other jurisdictions.
Second, the licensing process in Bermuda is efficient and well-established. Applications are typically processed within a matter of weeks, and the Bermuda Monetary Authority is known for its accessibility and willingness to engage in constructive dialogue with applicants and their advisers. This pragmatic approach to regulation is frequently cited as a key differentiator for Bermuda when compared with other domiciles.
Third, Bermuda offers an unparalleled depth of professional service-provider expertise. Captive insurance managers, actuaries, auditors, and legal counsel with deep experience of group captive structures, are readily available on the island. This ecosystem enables group captives to access the specialist skills they require without the cost and complexity of assembling a large in-house team.
Finally, Bermuda law and regulations accommodate a broad range of captive structures, including single-parent captives and group captives, along with rent-a-captive structures, segregated accounts companies, and incorporated segregated accounts companies. This flexibility enables captive owners to tailor their structure to suit a commercial outcome or a specific risk management objective.
Looking Forward
The Bermuda insurance market already offers numerous examples of successful group captive programmes across a range of sectors, including healthcare, energy, and more recently, technology and professional services. These programmes demonstrate the versatility of the group captive model and its capacity to address the risk-financing needs of a variety of industries with distinct risk profiles.
Looking ahead, several broader market trends are likely to shape the development of group captives in Bermuda. Persistent macroeconomic pressures — including inflationary cost trends and the potential impact of tariffs on global supply chains — are prompting organisations to seek greater control over their insurance spend and more predictable risk-financing outcomes. Group captives, with their emphasis on pooled capital, are well suited to meet these demands.
At the same time, emerging risk categories, such as cyber liability and the growing interest in parametric insurance products, present new opportunities for group captive solutions. By aggregating exposures across a diversified membership, group captives can develop the data and capital necessary to underwrite risks that might otherwise be uninsurable or prohibitively expensive on a standalone basis.
There is also a growing recognition of the role that group captives can play in closing protection gaps — whether in specific industries facing hardening commercial markets, or in economies where the commercial insurance market remains underdeveloped. The collaborative nature of the group captive model, combined with Bermuda’s mature but flexible regulatory framework, its depth of professional expertise and its established track record for innovation, makes the jurisdiction an ideal domicile for organisations seeking to explore and develop group captive solutions.
This article was originally published in the IFC Review.