After operational difficulties posed by the pandemic settled, a large, global hospitality organization wanted to refocus on employee health and productivity, with operational efficiency and risk management in mind. With an emphasis on the employee experience, the client engaged Spring to conduct a review of their workers’ compensation, disability and leave of absence plans, policies and processes with the goal of understanding how they compare to industry best practices and how insourced, outsourced, or cosourced models could yield improvements.

Spring’s Work

After thorough research and analysis, we proposed a shift from the decentralized, separate, and insourced disability and LOA model to a centralized, integrated, and outsourced approach across WC, FMLA/LOA, ADA, RTW and STD/LTD. Our holistic model incorporates:

By outsourcing, the client can achieve its goals of:

The Results

Spring is working to implement the solution to yield the following quantitative and qualitative success factors:


Have questions about how to build or improve your absence management program to see tangible results like these? Check out our website or get in touch today.


In 2018 the State of Hawaii Legislature passed a bill, Session Law Act 109, directing the Legislative Reference Bureau (LRB) to conduct an analysis to determine the impacts of establishing a state paid family leave (PFL) program. Stakeholders considered in the impact analysis included industry, consumers, employees, employers, and caregivers. The goal of Act 109 was to create a potential framework for the development of a PFL program that would offer paid leave for workers who need to care for a family member. The bill allowed the LRB to contract with a consultant for completion of the impact study, and after a formal Request for Proposal (RFP) process, Spring was selected to partner with the State of Hawaii on this initiative.

The Challenge

The objectives of the impact study were to:

At the time, six states plus D.C. had a paid leave program for family and/or medical reasons in place, and part of our evaluation was not only a cross-model comparison of existing plans, but also a provision of the PFML landscape overall, including states with pending or rejected legislation. Both qualitative and qualitative factors needed to be assessed, including required operational activities, outreach and education approaches, state administration models, headcount modeling, IT infrastructure development, and projected startup costs. Integration with Hawaii’s existing State Temporary Disability Insurance (TDI) program was also explored.

Spring’s Work

Through Spring’s three-phased approach, the impact study covered a wide range of areas in detail that were critical in deciding on the development of a PFL plan in Hawaii. Starting with a deep dive into existing state PFL programs which included California, Massachusetts, New Jersey, New York, Rhode Island, Washington D.C., and Washington as seen below.

Plan Structure:



Implementation Timeline

Within this evaluation, factors like gender equity, hiring practices, speed of benefit payments, ease of making applications or claims, financial sustainability, data collection capabilities, and compliance monitoring capabilities were also assessed. To arrive at these impact answers, Spring’s actuaries developed an actuarial impact model that utilizes actual PFL claim and other industry data to project claim incidence rates, duration of benefits, average benefit payments, expected costs and funding rates under existing state models and Hawaii’s current TDI structure.

The Results

Spring’s comprehensive impact study for the State of Hawaii’s Legislative Reference Bureau is available for public viewing here. Our team presented it in person to various legislators. While the State has not moved forward with a PFL program to date, we continue to keep the dialogue open and all parties are pleased with the framework set out in this project, as it was an imperative piece of due diligence on behalf of the State.

The Challenge

A private equity group, backed by a family office, was struggling with a piece-meal insurance approach between its 22 portfolio companies representing a diverse range of industries (e.g., hospitality, farming, technology) and related risks. Each entity was purchasing their own insurance individually. Over time, hardening insurance markets caused healthcare costs to increase and the organization’s fragmented structure did not allow for effective cost savings and risk management tactics.

The Goal

At the outset, we worked with the client to establish goals and set expectations. The first order of business was to bring the portfolio companies together into an integrated insurance program that can yield cost savings due to economies of scale. Then, we would explore alternative funding mechanisms for that single entity that would enable customized coverage at reduced rates. The end result would be a holistic view of the risk profiles represented within the organization which would improve enterprise risk management.

The Process

We helped the family office file and establish a captive insurance company to fund employee benefits and property & casualty risks. This included:

Based on our analysis, the client decided it would be advantageous to include all Property and Casualty (P&C) lines, medical stop-loss coverage, employee benefits and the family’s personal coverage within the captive program.

The Results

The captive structure enabled great advantages for the client across two significant areas:

  1. Cost Savings: By unifying its subsidiaries into one large group and moving away from the commercial market, the organization is projected to reduce its total insurance related costs by 25%, with increased coverage.
  2. Enterprise Risk Management: The parent company now has the sum total of its risk in front of them, allowing for more informed decision-making and a better understanding of their exposures and vulnerabilities across the board. The captive has also diversified the client’s risk and created an improved risk profile, both important for a long-term, stable and successful

A captive can be a valuable unifying tool among diverse family offices and private equity firms, producing lower operating expenditures (opex), enhanced products/services not available in the commercial market, favorable tax incentives, additional cashflow, and a seamless transition from your current model. If you would like to learn more about taking this path for your organization, please get in touch.

The Challenge

A mid-sized (over $1B in annual revenue) architecture, engineering, construction and consulting firm was utilizing an industry group captive to underwrite their workers’ compensation, general liability, automobile coverages and subcontractor default risks. The organization requested Spring to help assess whether the group captive solution was still optimal and to help shape their risk management strategy. As part of this review, we assisted them in considering the pros and cons of exiting the group captive program to form their own single parent captive. To support this decision, we helped them understand both the financial implications and qualitative factors they should contemplate and the implications of this change.

The Process

Spring began by undertaking a total cost of risk assessment at the line of business level for workers’ compensation, general liability, excess general liability, professional liability, subcontractor default, and medical stop-loss insurance lines. The purpose of the study was to explore the universe of options available to the client and included a high-level review of potential risk structures, retention levels, domicile options and reinsurance/fronting options. In addition, Spring commented on the competitiveness of the existing framework, generating a robust view of the advantages and disadvantages of the different solutions, and provided recommendations as to how best to move forward.

Spring’s Solutions

Spring implemented a multi-step approach that included the following:

Ongoing Success

In the current challenging market conditions, a captive solution is a powerful tool to have during renewal negotiations. Even if it isn’t implemented immediately, having the captive option available provides a competing solution to traditional carriers. Even for coverages not insured through the captive, the client will have increased bargaining power and may receive better offers from traditional insurers. Most importantly, moving from a group captive to a single parent captive has provided the organization the opportunity to use a captive solution to support other aspects of their business. For instance, by adding medical stop-loss to the captive, they will be able to generate additional savings for the HR teams, allowing increased support for employee wellbeing and resources to implement additional wellness initiatives.
In summary, the client chose the solution that provides them flexibility, over maintaining the status quo of their group captive, and enables the parent company a recoup of profits, particularly as it builds surplus over time, that would otherwise go to the group captive and excess carriers. As the captive matures, the client is also expected to receive captive profits back as dividends and be able to further increase self-insured retentions. We will continue to provide insurance consulting (both captive-related and beyond) to the parent company and lead them through the initial year of single parent captive strategies.

The Current State of ‘Employer vs. Insurance RFPs

Employers today often find themselves undertaking a Request for Proposal (RFP). RFPs are an important tool that allow for greater insight into the market. RFPs are used as a mechanism by employers to test the market competitiveness of their insurance programs and collect market intelligence regarding new offerings. The bidding process aids accountability and provides market information on emerging risk management techniques, regulatory changes and recent trends. However, RFPs are a time consuming and an arduous task that require inputs from multiple stakeholders, who often have competing priorities.

Captive insurance companies provide an alternate solution for employers who are looking to escape the rut of undertaking an RFP every few years. Captives provide greater transparency and control to employers over their insurance programs and eliminate the often costly and time-consuming need to bid programs to ensure competitiveness. Captives allow organizations to have a clear understanding of their experience and thereby eliminate the arbitrariness of rate hikes by the incumbent carriers. An RFP can also be an expensive exercise both in terms of tangible and intangible resources. In monetary terms, there are the fees for advisors/brokers/consultants. Additionally, time and effort required by your team are also important factors to consider while evaluating the true cost of an RFP.

A bidding exercise is often seen as an opportunity to hit reset on an existing plan and evaluate if the program continues to meet the everchanging needs of an organization. In a dynamic and ever-changing business environment, waiting for an opportunity to bid the program to reevaluate its effectiveness and appropriateness for the organization can result in repairable loss. Businesses need to be able to constantly evolve and change to meet the needs of the market or risk losing its competitive edge.

Captives provide a clear line of sight to the working of the program, thereby allowing for customization in an almost real time basis. A captive framework leads to additional reports and information which further facilitate tweaks and adjustments that benefit an organizations insurance program.

A captive insurance company allows a company to gain true transparency and control of not only their loss exposure, but also the expense structure required to support their programs. This transparency promotes a sense of partnership between the employer and the insurance carrier. Employers with captives have often commented on the change in the relationship dynamic between the two entities, viewing the carrier as a partner than as a market option can have long term benefits.

Organizations that use captives are able to ascertain the need for a change or adjustment in rates without input from the market. Captives rid insurance transactions of opaqueness and thereby results in an open and honest conversations among all stakeholders – insurance carriers, brokers and internal organizational stakeholders.

An integral part of most insurance arrangements is the broker. Broker arrangements can, at times, create a degree of obscurity. Since brokers are usually commissions-based, decreasing premiums or making changes may sometimes not be in the broker’s best interest. This could potentially add another degree of complication and difficulty to the decision-making process. In a captive setting commissions paid to brokers are clearly visible. This clarity of fees generally leads to a clearly defined scope of work for the broker/consultant/advisor. Allowing employers to derive more value from their service providers.

Many organizations may feel pressure compelled to bid frequently, to continually create competitive pressures and achieve better rates. This approach can create an abrasive relationship between the organization, the broker and the insurance carriers. Insurance carriers are looking for long term partners and often may choose to not bid aggressively in cases involving organizations who have a reputation of constantly looking to bid, as this can be disruptive for all parties involved.

Case Study

Spring recently undertook an analysis for an organization whose incumbent broker initially quoted a 25% rate increase on the employee benefit program. When threatened with the possibility of an RFP, the incumbent carrier revised their quote to reflect a 10% increase in premium. The organization was disillusioned with the insurance carrier and decided to undertake an RFP – which resulted in an alternate carrier quoting a net decrease in premiums of about 15% along with a multi-year rate guarantee.

While a 15% rate reduction is a seemingly positive result, the process and effort required to get there was expensive, time consuming and left the HR team feeling beholden to the wishes of the insurance carriers and the broker.

The employer requested Spring undertake an independent review of the information presented to them by their broker and insurance carriers. Spring’s analysis revealed that the organization had a much better loss experience than indicated in the rates provided. The organization is currently considering its options for the upcoming year, including potentially utilizing a captive to underwrite their employee benefit risks .This exercise could have been avoided if the employer was using a captive to insure its risks. At the time of the initial rate increase (of 10%)the employer along with their broker would have been able to quickly ascertain that the rate hike was unnecessary and could have been addressed with a quick discussion with the insurance carrier. Which could have saved the organization valuable time, effort and cost of disruption.

To conclude, companies that are financially sound and have a reasonably predictable insurance risk, are ideal candidates to evaluate the possibility of using a captive. If you are an employer looking for a long-term solutions should consider a captive. Captives provide the benefits of an RFP without disrupting a company’s day to day activities. It also helps bridge the gap of obscurity and trust between your company and your insurance carriers.

To see if a captive solution is right for your company, a captive feasibility study is the logical first step. The study identifies the organization’s goals and objectives, reviews the current state of programs, analyzes the data, and then estimates potential captive savings for each line of coverage. The study determines the most effective program design for the organization, including potential advantages or disadvantages of this alternate funding mechanism.