SAN DIEGO – The hard insurance market is driving more interest in group captive insurers, but the structures offer benefits that will outlast pricing cycles, risk management and captive experts say.

Construction contractors, who are competitive in other areas of their business, can use group captive structures to share safety and risk management practices and improve their loss records, they say.

In addition, the inclusion of senior executives in captive meetings can enhance risk management processes at member companies, they say.

As prices have risen across multiple lines of coverage amid the hard market, interest in captives is growing, said Jason Oswald, president and managing director at Construction Insurance and Risk Captive of America Ltd., a Bermuda-domiciled group captive for contractors.

Companies considering joining a group captive, though, need to understand that it’s a long-term commitment and that they are effectively getting into another line of business outside of their traditional operating areas, he said.

“You are buying into an insurance company, another business, and you need to not do that blindly,” Mr. Oswald said during a session of the IRMI Construction Risk Conference in San Diego on Monday.

CIRCA requires potential members to attend a board meeting and the process takes at least 90 days, he said. “We are really looking at the cultural fit,” he said.

If a company commits to joining a group captive, it can see benefits it might not garner with a single-parent captive, said Tricia Kagerer, Dallas-based executive vice president, risk management, at Jordan Foster Construction LLC, which is a member of CIRCA.

Contractors that may be bidding against each other in their core business are able to share risk management practices that can benefit all of the group captive members, she said.

“We wanted to learn from like-minded people,” Ms. Kagerer said.

Being in a group captive can also help when a contractor faces difficult losses, she said. “When there’s a problem, I want to know that I’m sitting across the table from someone who’s asking me tough questions but understands my risk profile.”

If a member suffers a significant loss, the captive’s loss prevention and risk management resources can be directed at the problem to reduce the likelihood of it reoccurring, rather than the contractor trying to address the issue individually, Ms. Kagerer said.

Another benefit of captives is that senior executives at member companies attend meetings and learn more about the benefits of risk management rather than just seeing risk management expenses as a cost to the company, she said.