Strategic Risks Construction Industry Captives

Greenguard: A New Kind of Captive Insurance Program

 
April 8, 2020

CICR comment: Our editor emeritus, Mr. Rosenbaum, finds that the Greenguard (GG) program is the first really new development in the captive business sector to come along for a long time. He interviewed Chris Kramer, managing director of Green Mountain (GM) Sponsored Captive Insurance Company, to bring additional details to the recent public press announcements about GG.

First, it’s useful to remind readers that in Vermont, where GM and GG are domiciled, a sponsored captive insurance company (SCIC) is like the core company of a protected cell company in other jurisdictions, also called segregated account companies, among other names. GM is the SCIC, licensed in Vermont under the domicile’s captive legislation. Created in 2012 through the leadership of its three owners: Elevanta, SRS, and Southern Insurance Underwriters, Inc., GM’s active cells are a mix of single owner and group programs insuring a wide range of risks including employee benefits, general liability, property, and workers compensation. It is the fourth largest SCIC in Vermont and, therefore, probably in the top 10 nationwide.

Cells getting to be big business. CICR estimates that among the 20 or so US jurisdictions offering captive cell structures, there are about 1,500 already active, mostly small ones. That number pales before the number of those that are active offshore in places like Bermuda, Cayman, Barbados, and Guernsey, where the number of active cells is estimated at more than 3,000. Each cell needs management and services, even if the expense costs for a cell are lower than the costs for a stand-alone captive. That’s still service revenue in the range of $70 million–$100 million (CICR’s estimate).

GG is one of the cells in GM, created in 2019 and open for business in 2020. It is an incorporated cell, which means it is a separate legal entity from GM itself, with its own board and management. GG also can act as an incubator for its group participants, which have grown in size and, thus, may wish to seamlessly transition their participation into a cell of their own. A participant, for example, may acquire or merge with a number of additional properties, making an individually owned captive (cell) an option.

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