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Captives draw growing interest for employee benefits as medical costs rise
Only about 200 of roughly 7,000 captives worldwide currently offer employee benefits, but adoption is expanding as firms seek to pool medical risk and smooth volatility.
Captive insurance is increasingly being pitched as a vehicle for employee benefits, but the market remains small today. According to Franck Baron of International SOS, only about 200 of roughly 7,000 captives operating worldwide currently write employee benefits business, meaning less than 3% of captive capacity is used for one of employers' fastest-growing cost lines. Insurance Business reports that the gap is beginning to close as medical costs climb, captive structures become more accessible, and early adopters build evidence of savings. Baron, speaking at a Captive Insurance Companies Association panel on employee benefit design, said his approach uses a long-standing Singapore-domiciled captive, expanded last year with a separate US-domiciled entity, as a long-term strategic platform rather than a short-term cost-cutting tactic.
The outlet cited forecasts that reinforce the financial rationale. Aon projects a 9.8% global medical trend rate for 2026, down slightly from 10% in 2025 but still elevated by historical standards, and Willis Towers Watson said companies are increasingly centralizing disconnected claims and cost decisions across countries, insurers, and renewal cycles through captives.
Ratings agency data also points to the potential payoff. Insurance Business said AM Best-rated US captives generated an estimated $8.2 billion in savings for parent organisations over the past five years, supporting the argument that captive benefits can retain underwriting results, smooth volatility, and improve predictability across benefit cycles.