Tuesday, May 21, 2024

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GROWMARK members saving $20m in premium from captive utilisation

Members of the GROWMARK captive are saving more than $20m in premium cost since placing their property risk inside the captive.

GROWMARK is an agricultural cooperative with around 250 members, but not all of them participate in the captive.

“We provide the fuel and propane, but we also provide the seed for planting, crop nutrients, crop protection, and all the agronomy products that the farmer needs,” Jaci Mennenga, director of risk management at GROWMARK told Captive Intelligence.

“After harvest, we are the first handler and store the farmers’ grain,” she said. “Our members entrust GROWMARK to produce and deliver the products they need.”

The company has two Vermont-domiciled captives, one for property and casualty insurance, and another for health insurance.

“We started to put a lot more of our property, general liability, and auto into the captive at the most recent renewal we had on 9/1,” Mennenga said.

“Until I got here in December of 2022, we were still purchasing a lot of risk transfer. Other than for workers’ compensation, the captive was not our primary insurance vehicle.”

Mennenga said after a few years of significant premium increases and recognising the surplus position they had built up in the captive, they began to increase the captive’s leverage.

“We ended up saving a significant amount of money by comparing what we were going to get for renewal terms from the market for full risk transfer versus what we put together using our captive to take on a large amount of the exposure and then transfer the rest,” she said.

“The savings were over $20m just on the property from looking at what the incumbent carrier wanted for a $200m programme compared to what we put together.”

Mennenga said property premium decreases is not something they have heard people talk about much in the commercial market over the last year, but the captive’s participation has delivered results.

“Many of our members had a premium decrease, so that’s an incredible result,” Mennenga said.

“The captive is performing well and now our next discussions are how we can figure out how to use the surplus in the captive for risk management incentives or how we’re going to give premium holidays or dividends.

“It’s a good place to be having those types of conversations now because of the good performance.”