The captive insurance industry doesn't need more awareness — it needs better execution. That was the focus of our February 12 webinar, "Captive Insurance: Walking the Walk," featuring Joe McDonald, EVP and Director of Captive Consulting at Captives.Insure, and Scott Bailey, Audit Partner at CRI's Raleigh office with over a decade in the captive space.
The audience was a mix — financial services, construction, manufacturing, professional services, and not-for-profits — and roughly half were new to captives. The conversation was built around a simple framework: conversations, data, and action.
The single most important discipline in captive formation is asking — and continuing to ask — what problem are we solving?
> "The market is saturated with so many voices selling solutions. I think our role as the people who are being called on to weigh in is to create a moment of silence, if you will, in the midst of all that noise. And ask — what problem are we actually trying to solve with the captive?"
> — Joe McDonald
A captive should never be a solution looking for a problem. When tax or estate planning becomes the primary driver, it invites unnecessary complexity, regulatory scrutiny, and long-term risk to the operating business. Bailey was equally direct:
> "It has to be insurance first. There has to be intention, and it has to be of substance. The tax code offers benefits, and we're not afraid of that. However, it's got to be insurance. It has to be an insurance discussion."
> — Scott Bailey
That scrutiny is fueled by real abuse — captives formed for the wrong reasons — and it makes the environment harder for everyone doing it right.
The most compelling captive candidates aren't companies fleeing a hard market — they're well-managed businesses that understand their loss experience and are tired of watching premium dollars disappear with nothing to show for it. They control their risks, manage their losses, and want to participate in the underwriting profits they're generating for someone else.
Not every captive looks the same, and the right structure depends on how much control and responsibility an insured is ready to take on:
The key is starting at the right level. Crawl before you walk, walk before you run. Over-engineering the first step is one of the most common mistakes we see.
Formation gets most of the attention, but ongoing operations and exit strategy are where programs succeed or fail. Captives are long-term business decisions — they should never be sold on pricing alone.
> "Throughout education, throughout our professional careers, we're taught how to start stuff all day long, but we don't get a lot of discussion on when it's time to draw something to a close."
> — Scott Bailey
That means building governance that asks hard questions annually: Why are we in this? Are we hitting our marks? If not, how do we pivot? If so, how do we still pivot? And critically — what does the dismount look like when the captive has run the course of its natural lifecycle?
The webinar reinforced what we see every day in our work: the companies that succeed with captives are the ones that treat them as operating disciplines, not financial products. They ask the right questions before formation, they keep asking them after, and they build programs grounded in insurance fundamentals — not tax strategies.
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