That simple idea is the reason the NCEO established OWN Health, a captive insurance group that provides health coverage for employee-owned companies. We believe that NCEO members already are better run than most companies, and we also believe that by working together they can get even better. One way to do so is to manage risk more efficiently through captive health-care insurance.
Companies in captives are usually in the range of 75–300 employees and have annual revenues greater than $20 million.
Captive insurance is simply a way for companies to pool their risk with a selected group of other companies — in the case of OWN Health, that group is other employee-owned companies, like Kinzler Construction Services. Kinzler’s CFO Breanne Kruger says, “Health care is one area where we felt we had no control, no understanding, and no clarity.” She was frustrated that even though their 250-person workforce could pull off an excellent year in terms of keeping claims low relative to their premium, the company would still see an 8% premium increase. If Kinzler had a bad year, the premium increase might start at 30%.
Kruger wanted more control and to better understand what was driving the company’s health-care costs, so she looked into the possibility of a self-funded plan. Self-funding offers complete control and transparency, but choosing a self-funded plan also means that the company is taking on 100% of its health-care risk. As Kruger sees it, joining a captive insurance group provides both control and transparency, but it is also “a bit less risky than jumping right in a fully-self-funded” plan.
Finding the right balance between control and risk is one motive for companies joining captive insurance. Another is that captives give participating companies easily available collaborators with whom they can share ideas, challenges, and best practices in health care and wellness. Members of a captive meet periodically and come to know each other and their businesses. They have strong motivation to problem solve together and to jointly invest in finding creative ways to improve the health and well-being of their employee-owners. By pooling their talents and resources, they have the potential to
find better solutions than they would
on their own.
The NCEO’s captive is based on three main premises:
Reflecting on Kinzler’s decision to join OWN Health, Kruger says the decision was about “more clarity on claims data, more control over what we’re offering our employees, and leveraging collaboration on wellness to help us improve our performance when it comes to utilization of health care.”
An alignment of interests, a degree of control, and a reason to collaborate: These are all reasons everyone can come out ahead in a captive insurance group of employee-owned companies. Just as employee-owners create success together and share that success, employee-owned companies can do the same by joining
a captive insurance group.