10
OPINION
Rethinking benefits funding
A s small and mid-sized design firms strive to attract and retain the best talent, many realize that offering competitive employee benefits can be a critical differentiator. Yet with rising costs, maintaining these programs increasingly calls for innovative funding solutions. Group captives can offer design firms flexibility, savings and control over employee benefit programs.
Justin Gough
As in other industries, many AEC firms are exploring captive insurance as an alternative to fund their benefits programs. Technically, captives are insurers established and owned by one or more non- insurance businesses, such as design or construction firms. Historically, while large corporations have been able to use captive insurers for employee benefits and other risks, smaller and middle market firms now can achieve the same advantages by joining and participating in an employee benefits group captive. These entities are owned and operated by multiple non-insurance companies, primarily to insure or reinsure the risks of their member companies. In effect, by forming a group captive, companies can collectively retain and manage risks that would otherwise be insured through traditional commercial insurance markets. This approach allows multiple
companies to band together to take control of their employee benefits programs, leading to potential cost savings and increased flexibility. Employee benefits group captives offer many advantages. For small and mid-sized design firms, in particular participating in a group captive offers several advantages, including: ■ Cost savings. By self-funding certain employee benefits, companies can save significantly on insurance premiums. Captives can earn underwriting profits and investment income on premiums paid, leading to potential savings of 10 percent to 50 percent compared to traditional insurance.
■ Economies of scale. Group captives benefit from
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THE ZWEIG LETTER AUGUST 25, 2025, ISSUE 1599
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