Employer Healthcare Spend Expected to Rise in 2024

The largest increase in U.S. employer healthcare spend may be coming in 2024, according to this article from Reuters. Citing multiple industry studies, average costs paid by employers are set to increase over 8 percent with medical inflation, demand for weight loss drugs and availability of other costly therapies among the factors driving these costs.

In this article, we’ll take a look at some of the trends in healthcare spending that are driving these rising costs, as well as ways to mitigate them.

Mental Health

41% of U.S. adults experienced high levels of psychological distress at some point during the pandemic, according to four Pew Research Center surveys conducted between March 2020 and September 2022.

Nine out of every 10 adults said they believe there’s a mental health crisis in the United States, according to a CNN report from last year.

And an NPR report from last week reported that roughly two-thirds of Americans with a diagnosed mental health condition were unable to access treatment in 2021, even though they had health insurance.

It is essential that we continue to address mental health by increasing access to treatment, promoting awareness and supporting initiatives that prioritize mental wellbeing. Employers are expected to continue expanding access to mental health support and services while reducing barriers to care.

Pharmacy Spending

An uptick in speciality drugs, especially those meant to treat diabetes and support weight loss, is the lead factor in growing pharmacy costs. GLP-1s (glucagon-like peptide-1 receptor agonists) have had a significant impact on healthcare costs for many U.S. employers, a trend which is sure to continue in 2024. These drugs, designed for patients with type 2 diabetes, improve blood sugar control by stimulating the body to produce insulin after eating.

They can also lead to weight loss. As GLP-1s become approved as weight loss medications without a Type-2 diabetes requirement, employers should be actively considering how they will approach these prescription drugs.

Woman getting prescription filled at pharmacy

According to Truveris, the size of the GLP-1 market is expected to balloon from $22 billion to $72 billion between 2022 and 2032. A Reuters article estimated the impact of these drugs: pharmacy benefit costs increased 8.4% year-over-year in 2023, compared to a much smaller 6.4% increase the year before.

Most employers are looking for more transparency when it comes to pharmacy benefit management (PBM) pricing. According to The Business Group on Health’s survey, 92% of employers are concerned about high-cost drugs in the pipeline, and 73% say finding more transparency when working with pharmacy benefits managers is a priority.

Health Care Delivery

The popularity of on-site clinics and access to virtual care is likely to be another continuing trend, which can also be a cost saver for employers.

By reducing the number of trips to urgent care facilities or even visits to a primary care physician, employers can reduce costs. The emphasis on preventative care and removing barriers to healthcare through on-site clinics and virtual health platforms can result in earlier intervention and prevention of chronic conditions. By encouraging regular screenings, vaccinations and wellbeing programs, these interventions can help identify health issues at an early stage when they are easier and less costly to treat.

It should be noted that while these practices became much more common in the days post-pandemic, it seems these practices may be leveling off in 2024. According to The Business Group on Health, roughly half of employers (53%) offered on-site clinics in 2023, with approximately the same figure is expected to do so in 2024. Because many employers have migrated to a hybrid or remote work environment, the need for health services at the workplace is no longer growing.

Final Thoughts

Rising costs are likely to continue to impact employers into the new year. However, by focusing on improving health outcomes and increasing access to mental health support and preventative care, employers can mitigate some of these costs. Work with your Gregory & Appel benefits consultants to devise strategies to offer great care, minimize increasing costs and provide benefits that attract and retain talent within your organization.

30 Quick Tips For Winter Weather Preparedness

December 21 marks the first day of winter. With cold and snowy weather approaching for much of the United States, this is a great time to take stock of some important safety tips for the months ahead.

In this article, we’ll divide our focus into three very important areas for winter weather safety: preventing slips and falls, driving safety and cold weather preparation for your home. For each of these areas, we’ve provided 10 simple tips for the winter months ahead.

Preventing Slips

The CDC reported that about 1 million U.S. adults are injured due to slips and falls each year, while the U.S. Bureau of Labor Statistics reported over 20,000 occupational injuries related to ice, sleet and snow.

Here are ten tips for reducing the risk of falls on slick surfaces this winter.

Vehicle Safety

Snowy, icy road surfaces contribute to a high volume of car crashes and injuries each year. Take a look at the tips below to reduce your risk and travel safely this winter.

Home Safety

Cold weather isn’t just a hazard for slips and vehicle crashes, it can also pose a threat to your home. Here are some tips for avoiding frozen pipes or other winter weather related claims, as well as some additional items for your winter checklist.

We hope you found these tips to be helpful. Follow this guide and you’ll be on track for a safe winter. Spring weather will be here before you know it!

This article was produced in a partnership with KPA.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Conquer the Stresses of Open Enrollment With These Tips for HR Pros

Open enrollment season has arrived for many U.S. companies, and if you are responsible for managing your organization’s benefits program, you already know how stressful this time of year can be. The tasks and responsibilities involved with guiding your colleagues through this process can unfortunately have a major impact on your physical, mental and emotional health. And you know that each year presents its own unique challenges.

To help benefits administrators navigate this challenging period, we have some guidance for promoting your overall wellbeing throughout the open enrollment timeframe.

Recognizing Signs of Stress

If you’re an HR pro, you already recognize the stresses and challenges that come with your role. This time of year, it can feel like a whirlwind of stress and pressure — you’re searching for candidates to fill an open role, dealing with the demands of leadership and trying to build and maintain a great organizational culture, all while juggling the challenges of open enrollment.

A recent survey found 98% of HR professionals have felt burned out at work in the last six months, while a separate survey reported that 43% consider planning or managing benefits to be one of the most stressful parts of their job.

Dealing with stress is impossible if you can’t recognize the differences between routine challenges of the job and feeling truly overwhelmed. Some of the short-term warning signs of excessive work-related stress can include [1]:

If you don’t deal with stress, the long-term impact on the body and mind can be even more significant [2]. Each of the short-term issues listed above can lead to more serious health issues over time. For example, difficulty sleeping for months will greatly impair your body’s ability to heal and recover. High blood pressure could lead to heart attack or stroke. Chronic stress can even impair your immune system, causing you to be more susceptible to illness [3].

It often seems those who help others have the most trouble asking for help themselves. In the next section, we’ll cover some techniques and practices to help manage work-related stresses.

Managing Stress

In the moment, it’s easy to get caught up in trying to solve a problem, even when you may not have an immediate solution. That feeling of being overwhelmed can be a lot to handle. There is no one-size-fits-all approach to managing stress. Understand that the guidance below can provide benefits, but what works for you may not work for another.

Use Your Support Network
Remember that you are not alone, even when it may feel like it, and that the best solution to dealing with stress is working with others to solve the problems causing tension in the first place. Any problem can seem overwhelming when you don’t see a clear solution. But sometimes, just talking through a challenge with a trusted colleague or even a loved one can provide clarity and give you an opportunity to view a setback with a little more insight.

Practice Self-Care
Self-care takes many different forms, but regardless of how you like to relax and pamper yourself, it’s important all the same. It doesn’t have to be a spa day or lighting candles by the bubble bath. Maybe it’s taking a weekend trip to see family or just spending time with friends at a concert or sporting event. Whatever it is that brings you happiness and gives you a break from the stresses of your personal or professional life, make sure you take the time to invest in yourself.

Exercise has been proven to help manage both acute and chronic stress [4]. It has also been shown to cancel out some of the long-term effects of stress, such as a diminished immune system [5]. It also provides a break from stressors and an opportunity to recharge while your mind is focused on your workout or activity.

It’s important to find something you enjoy doing — if you don’t enjoy running, for instance, a 30-minute jog will probably just stress you out even more. Know your strengths and interests, and try many different things to find an activity that suits your preferences.

Mindfulness is the ability to be fully conscious and aware of where you are, what you’re doing and taking the time to process your surroundings instead of being reactive [6].

Think of a time when you’ve experienced a setback or hurdle and reacted with frustration. Mindfulness is when we seek balance in those moments and experience them rationally, not emotionally. When we are mindful, we are able to reduce stress, enhance our performance, gain insight and have awareness of our own wellbeing.

Studies support this practice: reframing your thoughts can help you reduce stress. Next time you find yourself feeling overwhelmed or reacting strongly to a setback, try to take a moment to process these feelings logically, rather than emotionally.

Box Breathing
This yoga technique is employed by many athletes and is even incorporated into training for Navy SEALs. It could also be considered a form of mindfulness. The practice is simple; do each of the following while slowly counting to four.

Repeat this several times, giving focus and attention to your breathing. Studies show that regulating your breath can lower levels of the stress hormone cortisol and reduce heart rate because it activates the parasympathetic nervous system, controlling the body’s ability to relax.

Regulating your breathing can have a calming effect, and directing your mind to focus on the four-count, as well as feeling the air enter and exit your body, can take your mind off external stressors. Practice this skill: working on it can prepare you to experience its benefits in times of hardship. It can even be a great practice to calm down and evict busy thoughts before bed.

Taking Breaks
Knowing your own best practices for productivity at work can present its own unique challenge. No matter your preferences, one thing is certain: taking breaks can not only improve your mood, it can make you more productive in the long run [7].

Being able to detach from a project and return to it later with renewed focus and energy can help you secure wins throughout the day, instead of feeling the burden of responsibilities piling up. In today’s connected world, it’s also likely you’ve felt pressure to be “on” evenings and weekends. You need to be able to detach from work in your down time, your mental health depends on it. Prioritizing breaks, downtime and setting boundaries can have a profound effect on your wellbeing.

Writing down your thoughts and feelings can help you be more aware of underlying beliefs and behaviors. Taking time to digest events in your life can help you define them more clearly and bring meaning to them. It can also help you resolve feelings lingering in your mind, and sometimes even uncover thoughts or beliefs you weren’t consciously aware of. Take time before bed or after a busy day at work to record thoughts and occurrences. It could even just be as simple as making a list of things you accomplished that day, versus fixating on items left unfinished.

Remember, You’re Not Alone

Remember that all across the country, there are HR pros like you feeling the same stresses related to open enrollment. It’s normal to feel overwhelmed from time to time, but that doesn’t mean you’re helpless. While it’s just about impossible to completely avoid work-related stress in any profession, hopefully these tips can help you now and in the future. You’re not alone — and open communication with your support network, practicing self care and being aware of your emotions can go a long way towards lowering your level of stress.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Level Up Your Organization’s Cyber Security With These Safety Tips

One cyber attack could derail your organization, costing you not just time and money, but also damaging your reputation. According to the FTC, phishing schemes cost individuals and businesses in the United States over $330 million in 2022 alone, more than double the reported losses from the previous year and a 500% increase over a five-year period.

Unfortunately, businesses and their employees are targeted with advanced email phishing attacks and text message scams every single day. These tactics have become much more common because they are effective ways to exploit personal and corporate security.

There are many factors that have led to the increase in these schemes, but what’s most important is being able to identify these and avoid the consequences of falling victim.

Recognize Phishing Attempts

To start out, here are a few tactics that are commonly used by potential scammers. It’s possible you will already recognize some of them. Being aware of these tactics can help you avoid them.

They Pretend to Be Someone You Know
You receive an email or text claiming to be from a friend, colleague or associate who asks you to click a link or share information.

An Urgent Request
The message you receive claims it’s an emergency situation — for example, a supervisor saying a task needs to be completed immediately. This lowers your defenses and plays on your desire to help them.

It Looks Real
The message comes from an email address that looks legitimate at first sight, but upon closer examination doesn’t match the company website or name. Scammers use familiar names and hope you won’t look at every detail to notice misspelled URLs or false email addresses.

Login Scams
Often, scammers will try to gain access or sensitive information by claiming there has already been a fraudulent login attempt on an existing account. In your haste to secure or recover your account, you may actually be entering sensitive information on a fake website, giving the hackers access.

QR Codes
It’s very possible you would recognize a false website URL, but a QR code is much harder to evaluate. Spam filters also have a harder time assessing images included in attachments. Malicious QR codes have been used to steal login credentials.

Avoid Falling Victim

So how do you avoid becoming the latest victim of a phishing scheme? Here are a few things to keep in mind. These attacks are becoming so common that it’s not a matter of if, but when you or your business will be targeted.

When In Doubt, Call
If you receive a suspicious email or text, contact that person through a trusted method that you know isn’t compromised. Even the number in the signature line of their email could be fake, as it is possible to invade an ongoing email chain, where impersonators can change contact information to make sure the call comes to them.

Be Aware of Impersonation
Artificial intelligence introduces greater risk to unsuspecting victims. Scammers are now using AI to craft specific and pointed email and text message-based attacks. Additionally, attackers are now able to replicate voices by using past recordings.

Always Use Two-Factor Authentication
Most online services offer two-factor authentication, and many now require it. This system offers additional security by requiring an additional verification after entering your password like a code sent to your phone, a security question or a scan of your face or fingerprint. While we can control and implement two-factor authentication for services that we control (company email, for example), we cannot always control third-party software solutions and websites that may not offer this capability.

Password Best Practices
Never use the same password in more than one location and avoid holding passwords in spreadsheets, documents on your computer or phone, or writing them down on a notepad. Using strong, unique passwords makes it more challenging for a hacker to gain access in the first place and limits the damage they can do if they secure access to one site.

Email Account Access
Keep in mind that cyber attackers can gain access to the accounts of legitimate business contacts. If something feels off about an email from a legitimate contact, pause and report it. An example of this may be a customer or vendor requesting you to send funds to a different bank account.

Keep Software & Systems Updated
Always keep operating systems and applications updated to the most recent version, including patch updates. It’s best to institutionalize these updates, either having all software automatically update when a new version is available or by having your IT department deploy these updates.

Firewalls & Antivirus Protection
Prevent attacks before they happen with antivirus software that can detect and mitigate viruses and malware. Firewalls can prevent bad actors from accessing vulnerable parts of your network.

Routine Employee Training
Conducting regular training for all employees will support the entire organization’s ability to resist cyber attacks. If employees are able to identify a threat, you significantly lower your risk of a breach. Empower everyone in your organization by at least providing basic training on security best practices.

While many of these tips and recommendations may seem like common sense, these attacks happen every day and even those with experience and training could be susceptible under the right circumstances. Gregory & Appel is CCIC-certified, meaning we can provide the guidance to help organizations prevent and respond to cyber attacks with incident response plans.

If you need guidance, connect with your risk advisor and get up to speed with the latest in cyber risk management.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Prevent Cooking Fires With These Best Practices

Today marks the start of the National Fire Protection Association’s annual Fire Prevention Week. This year’s theme is Cooking Safety Starts With You. Pay Attention to Fire Prevention.

To support this national agency’s efforts, we’ve gathered some important cooking tips to remember. While many of these tips may seem like common sense, these helpful reminders can help prevent damage to your home and property and even save lives.

Why It’s Important

According to NFPA, cooking fires accounted for 49% of all home structure fires between 2017 and 2021, by far the biggest cause of both fires and injury.

Additional statistics of note:

And, according to reports by Indianapolis CBS4 and The Washington Post, house fires burn significantly faster today than they did in the past due to higher use of synthetic materials in homebuilding and in items like furniture and carpeting used in the home. That means cooking safety is more important now than ever.

Graph showing leading factors in home cooking fires. Figures below
Top causes of home cooking fires. Additional context provided in next section.

Tips for Fire Safety

With that information in mind, let’s cover some important safety tips that can help reduce risk while cooking.

Other Things to Remember

While the following tips and reminders aren’t directly related to cooking safety, this time of year is a great time to remember and plan for the following:

If you are looking for more cooking & fire safety tips, more information can be found at NFPA.org.

[1]: NFPA’s Home Structure Fires research, April 2023.
[2]: NFPA’s Home Cooking Fires infographic.
[3]: NFPA’s Home Cooking Fires research, September 2023.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Captives Part 1: Breaking Down the Basics

In part one of our captives blog series, we’ll define captives, explore why you might join one and examine the different types of captives.

At Gregory & Appel, it’s our job to find the best risk transfer program for our clients – and for many, the traditional market is the right fit. But for companies looking to have more control over their insurance costs, alternative models may be available.

What Are Captives?

Think about how you buy traditional insurance. You pay the insurance company a premium and regardless of your own loss activity those premiums often fluctuate year-to-year, depending on the state of the market. Many companies and executives are becoming increasingly frustrated with a lack of control over what influences the price of their premiums and what, if anything, they can do about it.

Think of a captive as a group of companies coming together to create their own independent insurance company. Instead of choosing to buy insurance from a third party, this group pays into a fund that consists of contributions from every member. If there are leftover funds after every organization’s claims have been paid out, each member would then get a share back. This benefit is one of the main reasons some companies are choosing to leave the traditional market.

Why Captives?

Consider this: If you own the insurance company (like you would in a captive), you’re actually paying yourself that premium. The money that the insurance company makes usually comes from both underwriting profits (when your premiums outweigh your claims) and investment income (when they’re taking your money and investing it over time).

In a captive scenario, your company is getting both the underwriting and investment income. And not only could you see more dollars come back to you, but you also have a say in how your premiums are set. As a captive owner, you would have control over your insurance company and would not be subject to wild fluctuations in the marketplace.

Are All Captives the Same?

There are many different kinds of captives, so we’ll break each one down for you below.

Single-Parent Captives (aka Pure Captives)

Owned entirely by one organization, they provide insurance exclusively to that owner.

Segregated-Cell Captives

May have more than one owner and they provide insurance to the owners of each cell.

Group Captives

Made up of multiple organizations (either similar or dissimilar in size or industry) who band together to buy insurance as a group. This is the solution we recommend to most of our clients and what we will focus on throughout this blog series.

Did You Know?

Captives can also be a creative solution for your employee benefits plan! And with the average time for returns in a group medical captive being 18 months, it’s an option you’ll definitely want to explore. You can read more about captives for employee benefits in part four of this series.

We’re firm believers in transparency, so we acknowledge that captives aren’t a magic solution and they aren’t a good fit for every company. There are calculated risks involved that should be fully explored prior to entering this type of strategy. And that’s why we’re here – to take the mystery out of alternative risk.

Click here to continue reading in part two, “Learning More About Group Captives.”

Or, to view any entry from this six-part series, check out the links below.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Captives Part 2: Learn More About Group Captives

In part two of our captives blog series, we’ll examine the current market conditions and why a group captive could be the right risk management solution for your business.

Current Market Conditions & High Premiums

We know the insurance market is hardening, meaning rates are increasing and underwriting is becoming more difficult. The hardened market results in smaller coverage limits and higher premiums for businesses. If your company wasn’t prepared for the current market, don’t worry – you’re definitely not alone.

After facing increased premiums year after year, we found that some businesses had outgrown their long-standing policies and were in need of a more consistent, cost-saving solution.

We’re encouraging some of our clients to consider group captives as a solution to the hard markets we’re facing. Although not every organization has the capacity to join a captive, they’re an option you should research if you haven’t already.

Understanding Group Captives

You read previously that a group captive is essentially a group of companies coming together to create their own independent insurance company. They can be an efficient way for middle-market organizations to both assume and transfer some risk.

The way most group captives work is they collect each member’s premiums and then divide them into two “buckets” from which they pay claims. The larger one is for smaller, more frequent claims, while the smaller bucket is reserved for expensive, catastrophic claims.

The standout benefit is that these buckets are usually created based on an actuary’s calculations, using your own claim experience history. This differs from traditional insurance in that insurance companies use generalized rates that are applied to multiple organizations and will fluctuate with market conditions.

Say another group member goes beyond their predicted claims for the year. Your premiums are used for your claims and help if you or another member of your group captive has claims exceeding their budget. There is typically a minimum and a maximum, so you would already be aware of the best- and worst-case scenarios. Then a reinsurer contracts with the group to pay for claims that are beyond the limits of the premium buckets, if necessary.

Lowering Premiums

The best news? If you’ve worked hard to keep your claims low for the first five years of your captive membership, and you continue to do so, your premiums come down. If you continue to decrease your claims year by year, your premiums will follow suit. And what’s even better, in member-owned captives underwriting and investment income are typically returned to members who have good claim experiences, so that as costs are decreasing, underutilized premiums are given back to you!

In a group captive, each member shares risks with the group they have joined. You wouldn’t want to share risk with companies that aren’t properly managing their claims. Partnering with like-minded group members who are proactive about risk management is vital.

We think of captives as a long-haul strategy. They require great planning and preparation, but can eventually pay off in the form of improved claim numbers, a return on premiums and access to invaluable resources, among many other ways.

Click here to continue reading in part three, “Addressing Common Misconceptions About Captives.”

Or, to view any entry from this six-part series, check out the links below.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Captives Part 3: Common Misconceptions About Captives

In part three of our captives blog series, we address some common misconceptions as shared by our clients.

Like any person in your shoes, you’ve probably had (or heard) the following thoughts:

Addressing These Misconceptions

Paying for Others’ Claims

Yes, it’s true that you may be sharing risks with other businesses, depending on the type of captive you’re in, but this doesn’t necessarily mean that will cost you more.

The beauty of a captive is that you’re paired with like-minded peers who are all trying their best to minimize their own risk and work their own claims as efficiently as possible. Every business has bad claims now and then – there’s no escaping it. In a group captive, you will always help your captive peers pay claims. But they are also there to help you pay yours when you have a year with high-cost claims, and since each captive also buys reinsurance, the captive and its members are protected from those rare, high-cost claims.

Claims Experience

One bad year of claims won’t rule out captives as an option. However, a history of several high-cost claims may cause a detour. If you find yourself in this position, don’t panic. An experienced broker can work with you to improve your company’s safety procedures and claim management, and help you get where you need to be in order to join a captive.


We hear this from new clients all the time. Somewhere down the line, someone tried to talk them out of captives because their business was “too small” or because they didn’t spend enough on premiums. The reality is that captive groups come in all sizes and span across different industries, so your insurance spend really shouldn’t be the deciding factor.

Are Captives Really Worth It?

Two of the main concerns about captives are that they’re an enormous time commitment and require ownership to be very involved.

The truth is, this alternative risk strategy may or may not be right for your organization, based on many factors. The reality is that if you choose this route, you may have to go to board meetings. It’s possible that offshore travel may be required because some captives are domiciled overseas. Also, the attention that you give your claims is probably going to be greater when it’s your money at stake versus when it’s the insurance company’s money paying out claims.

There’s definitely a commitment of time, energy and resources. That being said, our experience indicates that the payoff (or payback to the owners of the captive) is significant and considerably worth the effort.

Click here to continue reading in part four, “Captives as an Employee Benefits Solution.”

Or, to view any entry from this six-part series, check out the links below.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Captives Part 4: Captives as an Employee Benefits Solution

In part four of our captives blog series, we discuss why some businesses are turning to captives as an employee benefits solution.

Group medical captives can also be a creative solution to your employee benefits needs when it comes to contractual protections, stable renewals and access to cost-containment programs.

We advise small- to medium-sized employers who want to move away from a fully-insured arrangement to consider the captive option for the following reasons:

Group medical captives can also benefit self-funded employers who want affordable stop-loss protection against the high cost of ongoing and catastrophic claims.

No New Laser* at Renewal

This eliminates the option for the carrier to carve out an ongoing, catastrophic claimant from the stop-loss policy. An employer can have the peace of mind of knowing they won’t ever be fully financially responsible for an ongoing high-cost claimant.

* Insurance carriers can assign a higher specific deductible, also known as a laser, to an individual with a known condition or an expectation of high claims. This additional risk becomes the employer’s in exchange for a reduced premium load. If the lasered claims do not materialize, the plan can benefit.

Stable Renewals

Average stop-loss renewal increases range from 7-9%, maxing out at +30% for unusually challenging claim years.

Similar to how captive programs function in commercial insurance, your company will have an opportunity to earn back dividends if your group performs well.

Members also have access to several industry-leading cost containment solutions:

To better understand if a group medical captive program would be the right fit for you organization, be sure to discuss these options with a broker or consultant who specializes in employee benefits.

Click here to continue reading in part five, “Is a Captive Right For My Business?”

Or, to view any entry from this six-part series, check out the links below.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Captives Part 5: Is A Captive Right for My Business?

In part five of our captives blog series, we use some real examples to show the value of joining a captive.

At Gregory & Appel, we helped our first client into a captive in 2004 and we’ve seen it all since then. Not to mention our professional advisors have over 50 years of combined experience specializing in alternative risk transfer.

We understand joining a captive requires time, strategy and money – especially in the beginning. And that’s not to say you won’t see those investments return in a few years. Our clients have seen improvements not only in premium savings but across the board. The structure of captives forces you to take a hard look at your internal policies and procedures and make necessary adjustments on a routine basis. So yes, this will take more time and energy, but your business will be better for it.

Of our expansive client base, only one has left their captive to return to the traditional market, only to request to rejoin a few years later. That’s pretty indicative of how these captives work. Once you’re in, you really want to stay. If you continue to pay attention to your claims and stay on top of risk management, you have a real opportunity to recover some of your premiums.

Not only do your premiums go down, but all those dollars that you don’t spend on claims come back to you.

Show Me the Numbers

Let’s take a look at this distributor company who came to us with only workers’ compensation. We introduced them to a captive group in 2006 and 15 years later their premiums had been cut in half over that period of time – even though their exposures had doubled, which in their case were payroll, sales and number of vehicles.

Almost immediately after they joined the captive, the Global Financial Crisis hit in 2007. Naturally, their premiums went up over the next few years but then began to stabilize until they doubled their coverage in 2011 by adding on general liability and auto policies. As you can see in the chart below, their premiums continue to decrease after this bump in coverage because they were really focused on loss control, maintaining safety procedures and risk management.

They ended up paying half as much for twice the amount of insurance (now including workers’ comp, general liability and auto).

The takeaway here is that being in a captive encourages you to manage your own claims in a way that will allow your premiums to decrease over time as well as get some of the money back that you didn’t spend on claims.


Here are seven points to help determine whether a captive may or may not be a good fit for your business.

If you can relate to one or more of the following, then you may want to reconsider captives or meet with an experienced advisor to see if it’s a viable option.

1. You’re not comfortable with team decision-making.

This can be a tough concept for some, especially if it’s not in your DNA. You don’t always get to call the shots when you’re in a group captive. Every member is given an equal opportunity to weigh in and vote on important matters. Fortunately, each captive member only wants the best for their group.

2. You do not spend enough on premiums.

There isn’t an exact formula to tell you whether or not you’ll be successful in a captive. However, we’ve found a good rule of thumb is that your company should be spending at least $100,000 annually on workers’ compensation, general liability and auto coverage for this type of insurance to be beneficial.

3. You have poor claims history.

Keep in mind that a poor claims history doesn’t permanently rule out captives as an option – it just means not at this time. Working with a risk management company will help get your company’s claims back on track and prepare you for the stringent requirements of group captives.

4. You can’t make the time.

There are several time commitments required, for example attending annual board meetings and other in-person gatherings that may or may not be offshore. You should also consider the amount of time it takes simply to research and understand the captive and all its available resources.

5. You do not have a strong financial base.

Captives are best suited for companies with strong financials and have the ability to withstand paying a portion of their claims.

6. You’re joining solely for tax purposes.

This is NOT an investment or a way of receiving tax benefits. Captives are strictly an insurance product. Whether or not they offer tax benefits for your organization should be determined by a CPA or qualified tax attorney.

7. You’re focused on short-term goals.

Captives are built for the long haul. Typically, distributions don’t begin until 3-5 years after the end of a policy year for commercial insurance captives (Employee Benefits captives might have a shorter schedule), so it’s best to have the long game in mind when getting started.

Now, remember, we’re not trying to steer you away, just making sure that you fully grasp the commitment required of a captive member. If you’re ready for guidance on the required preparation for joining a captive, read on.

Click here to continue reading in part six, “Preparing to Join a Captive.”

Or, to view any entry from this six-part series, check out the links below.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.