The numbers reveal a telling story for professionals in the captive space and highlight why U.S. companies are doubling down on captive insurance. While traditional commercial auto insurers struggle with combined ratios exceeding 100%, captive insurance programs are experiencing the opposite.
In 2024, AM Best-rated U.S. captives achieved a combined ratio of 88% and net profit of $1.3 billion, outperforming traditional commercial auto insurer counterparts. This performance advantage explains why captives are expanding beyond large corporations into middle-market and smaller businesses.
For captive managers, underwriters and risk consultants, this performance gap highlights both an opportunity and a challenge. As the demand for commercial auto insurance continues to rise in the market with a projected value of $390.5 billion by 2033, even high-performing captives must develop innovative ways to gain greater loss control and optimal cost benefits.
The answer may lie in how captive underwriters and risk professionals leverage driver data to transform their risk assessment methods. While many captives are likely beyond basic methods of pricing risk, the market leaders are embracing driver intelligence that transforms their ability to move as quickly as the risk itself.
We explore the rapid growth of captives and why, as the market continues to grow, a complete picture of driver risk can streamline underwriting strategies, provide invaluable information for loss control efforts and contribute to higher cost savings that generate revenue for businesses seeking this insurance.
Why the Market Is Forcing Captive Innovation
The growth of captive insurance has accelerated in recent years, driven mainly by shifting market dynamics and risk management challenges. Three of these forces reshaping this moment for captive professionals include:
- Environmental, Social and Governance (ESG) integration and emerging disclosure requirements demand more transparent risk management documentation, requiring captive managers to demonstrate proactive risk mitigation strategies beyond traditional loss control methods.
- Artificial intelligence (AI) is expected to transform the captive landscape as companies collect more data and utilize AI tools and technologies. Underwriters and captive managers who can harness driver data effectively gain significant advantages in risk selection and pricing accuracy.
- Economic uncertainty and a hardened traditional insurance market have pushed captive programs to face increased scrutiny to maintain their performance advantage. Traditional rate increases are no longer sufficient and better risk assessment is necessary.
These influences create pressure on insurance professionals to innovate beyond conventional underwriting approaches, particularly as captive fronting arrangements become more competitive.
In the S&P Global 2025 U.S. Property and Casualty Insurance Market Report, the commercial auto combined ratio is projected to be 106% in 2025, another year where this line exceeded 100% despite the consistent push for rate increases over the last decade.
“We have expressed optimism in the past that factors such as increased underwriting discipline, ongoing efforts to achieve rate adequacy and the emerging role of technology in promoting vehicular safety would eventually lead the business line back toward sustained profitability, but the elevated combined ratios of the past three calendar years give us pause as to how achievable that outcome may be,” S&P analysts noted in a Reinsurance News article.
The pause on obtainable results for traditional commercial auto insurers showcases how captive risk management alternatives are attractive to businesses seeking healthy profitability margins. For captive managers, the investment in data can bring continued value in risk control and management strategies.
The Captive Advantage Isn’t Enough to Be Successful
The captive model's success is measurable. Captive groups leverage intimate knowledge of their members' operations, safety culture and driver populations in ways external auto insurers cannot replicate. This alignment of information has delivered superior combined ratios, explaining why Fortune 500 companies now operate captives.
Yet even successful captive underwriting often relies on annual or semi-annual assessment cycles that create gaps in risk visibility. For fronting carrier underwriters, this creates challenges when pricing fronting arrangements and assessing retained risk exposure. Historical loss experience may not reflect current driver quality or emerging risk patterns, making it difficult to establish appropriate fronting fees and retention levels.
This gap becomes increasingly problematic as fleet operations grow and risks evolve at unprecedented speeds. Driver behavior patterns shift, vehicle performance deteriorates and market conditions can shift driver availability. The traditional assessment methods used by captive managers can lead to unexpected claims that impact results.
The good news is that the technology to eliminate these gaps exists. Telematics data, predictive analytics and monitoring platforms equip captive managers with insights that transform how they approach risk assessment and loss control.
Instead of fixing broken approaches, the goal is to enhance them with real-time intelligence that eliminates assessment gaps and enables proactive risk management.
How Adaptive Data Changes Everything for Captives
Captive managers are uniquely positioned to access their parent company’s driver data readily. However, it’s one thing to access the data and another to make sense of it. Data companies specializing in risk assessment and management, like SambaSafety, can provide underwriters and captive managers with actionable insights that traditional assessments can’t match.
Here are a couple of ways that insurance professionals can utilize driver data to their advantage, without being overwhelmed by the numbers:
- For underwriters, whether captive-owned or leveraging a fronting carrier, driver scoring enables dynamic risk assessment for pricing arrangements more accurately. When establishing retention levels, underwriters can access current driver data that reflects exposure, not just loss patterns. Individual risk profiles allow for precise pricing.
- For captive managers, continuous driver monitoring can help managers optimize reinsurance structures based on current risk profiles while demonstrating ongoing risk improvement to captive owners.
- For loss control, driving data (telematics, camera, MVR, CSA and claims) can help identify risk factors that contribute to the likelihood of an accident occurring. SambaSafety’s Risk Index brings these data sources together to provide a complete picture of risk that allows loss control to benchmark and understand what behaviors may lead to an accident—opening the door for targeted driver training and monitoring programs.
How do teams get there? Because many commercial vehicle operations have existing cameras or telematics devices installed, that data alone can provide valuable insights for underwriters and loss control teams.
Underwriters can adjust individual member pricing based on predictive risk scores that update continuously, while your while your risk consultants focus on members with higher risk, providing them with insights and tools to effectively mitigate risk, like targeted training or route modifications. This shift from damage control to loss prevention creates measurable improvements in safety outcomes and financial performance that compound over time.
The Advantages of Working With Captive Programs
Insurance teams working with captive programs possess three critical advantages that position them to lead the effort to adopt data as a risk assessment tool. These advantages include:
- Direct access to fleet telematics and operational data
- Alignment between risk prevention and financial performance
- Data investments that have high ROI for all stakeholders
Most importantly, captive programs enable insurance teams to implement advanced analytics infrastructure without excessive red tape, allowing them to deploy capabilities that enhance underwriting and loss control functions.
In a market that is growing at a rapid pace, the data benefit to captives extends beyond underwriting. Here are a couple noteworthy mentions:
- Superior risk management capabilities through driver intelligence create stronger captive program performance, leading to higher client satisfaction and retention rates.
- Real-time risk intelligence allows for dynamic portfolio management that traditional carriers cannot replicate. Insurance professionals can adjust coverage, pricing and risk retention based on current conditions rather than historical assumptions.
Driver Data as the Foundation of Captive Success
The commercial auto insurance market is projected to reach $390.5 billion by 2033, highlighting the competition among captive programs. Insurance professionals who act decisively to implement risk management models and predictive intervention protocols will establish themselves as leaders.
Traditional commercial auto insurers struggling with information asymmetries and outdated risk assessment models cannot replicate the data advantages available to captive programs. However, this advantage only materializes when insurance professionals leverage driver intelligence effectively.
For captive managers, the foundation for market leadership starts by understanding how driver data can enhance every aspect of captive operations. Are you ready to lead it?
