Captive insurance is no longer just a solution for Fortune 500 giants. As the model migrates into the mid-market, it’s forcing a fundamental redefinition of what brokers do - and how they add value.
Captive insurers now number over 8,000 globally, writing $50 billion in premiums. As access expands, so does appetite - especially in mid-markets, where brokers must offer deeper guidance, not just placement.
Prabal Lakhanpal (pictured), senior vice president at Spring Consulting Group, has seen this shift up close. Once the domain of large corporations, captives are now gaining traction among smaller clients - not because the model has been simplified, but because both brokers and buyers are becoming more sophisticated.
In the past, placing coverage was the priority. Today, strategic guidance is paramount. “Brokers in the mid-market are having to adjust and grow into that role of being more of a key advisor, risk advisor, rather than being the placer of insurance,” Lakhanpal said.
He believes brokers must guide clients through a long-term plan - not pitch captives as quick wins. “Helping clients understand that captive is not a silver bullet, it's not something that's going to save you money or cost overnight. You are creating a roadmap,” he explained.
That roadmap often starts with familiar risks like workers’ comp or medical stop-loss, but brokers are now advising on more complex uses - construction programs, surety, even enterprise-level planning. With that flexibility comes a greater need for nuance.
“To me, that’s what a broker’s role is,” Lakhanpal said. “Helping their clients think through the unique value proposition that captive brings to them within their organizational ecosystem.”
Still, he is careful to point out that captives do not replace insurance altogether. “You still need an insurance partner for your catastrophic coverage and reinsurance needs,” he said.
A key driver of this evolution is the rise of Protective Cell Companies (PCCs), which allow smaller organizations to access captive structures without building out their own infrastructure.
“There’s a lot of infrastructure that comes ready to go with the PCC, which can be immensely helpful for clients who are trying to get comfortable with the idea of captives,” Lakhanpal said.
Yet with accessibility comes risk - especially when brokers oversell ease. “I do see a lot of brokers sort of leveraging PCCs as a way of saying a client can jump into a PCC and be off to the races pretty quickly,” he said.
That framing, he warns, glosses over the nuance. “While there's certainly some truth to it, I believe PCC offers some efficiencies – however, just those efficiencies aren’t the primary win with a PCC,” he added.
Understanding the regulatory implications, risk tolerance, and long-term planning requirements is critical - and often missing in fast-track pitches. “It's incumbent upon all of us to make sure the client understands the nuance of what they're signing up for,” he said.
The broader concern, Lakhanpal noted, is a market saturated with silver-bullet messaging. “The gap, there's a lot of brokers who are operating as if captive insurance is a silver bullet, right? That concerns me about the market sometimes.”
"Captive insurance is merely another way to fund for risk that exists in the ecosystem,” he said. “You're creating a more efficient funding mechanism.
That mechanism doesn’t erase claims - it simply structures how they’re paid. “Nobody is running away from your claims,” he added. “If you're self-insured, be it through a captive, you are paying for claims as they arise. If you are insured through the guaranteed cost model, you're paying for those claims at renewal.”
The true promise of captives lies in stabilizing cost volatility. “A captive is creating a model which is reducing the volatility associated with self-insurance,” Lakhanpal explained.
As captive adoption rises across market tiers, the demand for deeper advisory support will only grow. Brokers who treat captives like off-the-shelf solutions may find themselves outpaced by clients seeking more than just a policy - they want a partner who can help them navigate a multi-year journey through funding structures, regulation, and risk strategy.
“Captives are a tool, not a miracle,” Lakhanpal said. And if brokers want to stay relevant, they’ll need to treat them as such.
