How to Take Back Control of Your Health Plan: A CFO’s Perspective

As healthcare costs continue to rise faster than general inflation, finance leaders are increasingly asked to explain where health plan dollars go and what levers actually exist to control them. Traditional fully insured plans offer simplicity, but often at the expense of transparency and long-term cost control. For many organizations, that tradeoff is becoming harder to justify.

Self-funding can be an attractive option for CFOs. Instead of paying a fixed premium to an insurer, employers pay claims as they are incurred and purchase insurance protection for catastrophic risk. For smaller and midsize employers, however, volatility from a single high-cost claim can make self-funding feel too risky. Group Captive programs were designed to address that specific risk gap.

How a Group Captive Works in Practice

In a self-funded arrangement, employers continue to self-fund their day-to-day medical claims. The employer also purchases Stop Loss insurance to protect against large or unexpected claims. Additionally, by joining a Group Captive program,  a defined layer is pooled and shared with other employers in the Captive program.

Claims within that pooled layer are funded collectively from premiums contributed to the captive. If claims are lower than expected, unused funds may be returned to members. If claims are higher, the shared structure helps spread the financial impact across the group. Above the pooled layer, Stop Loss is there to provide additional catastrophic protection.

This video provides an introduction to Group Captives:   
https://vimeo.com/1007022432

A Simple Financial Example

Consider a group of employers of similar size and risk profile that join a Group Captive program together. One employer experiences an unusually high claim year, while others do not. Instead of the volatility hitting a single balance sheet, the captive structure spreads it across all the member companies. Over time, good risk management and favorable claims performance can result in lower overall volatility and the return of unused premium to members, rather than profit kept by an insurance carrier.

Risk, Control, and Tradeoffs

Group Captives are not risk-free. Participation requires a long-term mindset, adequate cash flow, and tolerance for more year-to-year variability than a fully insured plan in exchange for lower fixed costs. However, employers can see exactly where their health care dollars are going, gain more control over their health care spend, and better align their health care expenses and risk.

For finance leaders focused on total cost of risk, not just annual renewals, a Group Captive program can turn health care from a fixed expense into a managed financial risk.

Who Typically Benefits Most

Group Captive programs are often a strong fit for organizations that have stable employee populations, predictable cash flow, and leadership alignment around long-term risk management. Employers with poor cash flows and very low risk tolerance who are seeking maximum predictability above all else may prefer remaining fully insured.

Next Steps

Evaluating membership in a Group Captive program typically begins with a review of historical claims, risk tolerance, and Stop Loss structure. You’ll want to make sure this strategy aligns with your company’s long-term approach to risk retention.

Have questions? Contact your employee benefits broker advisor or Berkley Accident and Health to learn more.

Coverage is underwritten by Berkley Life and Health Insurance Company and/or StarNet Insurance Company, both member companies of W. R. Berkley Corporation and both rated A+ (Superior) by A.M. Best. Not all products and services may be available in all jurisdictions, and the coverage provided is subject to the actual terms and conditions of the policies issued. Payment of claims under any insurance policy issued shall only be made in full compliance with all United States economic or trade and sanction laws or regulation, including, but not limited to, sanctions, laws and regulations administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”).

BAH AD 2026-106