The United States Department of Labor (DOL) has tentatively authorized an Employee Retirement Income Security Act (ERISA) exemption regarding pension plan risk transfer to a captive. This healthcare network is the first organization in history to receive ERISA approval to transfer pension risk in a captive. This is groundbreaking news, as it opens the doors for plan sponsors to better manage their risk related to defined benefit pension plans programs. In short, using captive insurance companies rather than traditional insurers alone gives plan sponsors the opportunity to fund their pension risk more cost effectively.

Their employees engage in groundbreaking cancer research and provide lifesaving care for patients. The employer engaged with Spring, to help design and implement this unique program for its retirement benefits. This included conducting actuarial analyses, navigating vendor and partner avenues, structuring transaction and direct contact with the DOL to work through the exemption process. Once approved, the employer is anticipated to receive $126.4 million in financial benefits from the DOL. As part of the terms of the exemption, the employer will be providing a one-time cost of living increase to the monthly retirement benefit to all plan participants and beneficiaries.

This is a groundbreaking next step in the evolution of risk management programs and set the stage for many other employers who are trying to structure a better program for their employees.

We’re excited to announce that Spring has been shortlisted for top Actuarial Firm and Captive Consultant in this Captive Review’s 2024 US Awards. Check out the full list of nominees here.

Our Managing Partner, Karin Landry has been featured among the top Influential Women in Captive Insurance by Captive International. You can find the full announcement here.

Every industry has its own challenges and nuances. Since our client base is widely varied, we routinely partner with our clients to tackle unique, industry specific obstacles as they build out customized employee benefit programs and strategies. When it comes to the airline sector, a specific pain point relates to adequate long term disability coverage for their licensed pilot employees.


Pilot union contracts typically require airlines (the employer) to provide long term disability (LTD) insurance to their pilots, but this coverage has become nearly impossible to procure in the traditional LTD market, for a range of risk reasons:

Pilots are humans like the rest of us, but given the stressful nature of their job and the consequences of their environment, they might be in greater need of LTD coverage than the average worker. For example, the FAA estimates the prevalence of substance misuse is 8.5% among pilots, with other sources placing that rate as high as over 15%1.

Sensibly, the FAA’s regulations around pilot licensing are very stringent, so there is a large risk that a pilot will lose their license over a medical condition, including the substance issues referenced above. As a result, the gap in the market for conventional LTD coverage has yielded a specialty market specific for pilots, which is based on the loss of a pilot’s license instead of the traditional definitions of disability, which are based on the ability to perform either the material and substantial duties of one’s own occupation or any occupation which could be reasonably expected to perform in light of their background. Since these loss of license plans are generally structured either as a monthly benefit while a pilot is grounded or as a lump sum, pilots who do not lose their license essentially have no product option available that provides income replacement as a traditional LTD plan would. In addition, even when the specialty coverage would provide a benefit, it is limited in availability and, with very little competition, premiums are high and there is minimal, if any, room for customization.

Potential Solution

At Spring, we often say that captives are the whiteboard of insurance, meaning that they can be leveraged and crafted in a diverse range of ways to solve for unique and evolving challenges. LTD coverage for pilots can be added to that whiteboard.

Most airlines currently have a captive insurance company, which they may only be utilizing for property and casualty (P&C) lines of coverage. Even when an airline does have employee benefits in their captive, they are typically not leveraging the captive for long term disability insurance or other voluntary benefits.

Long tail risks such as disability are particularly beneficial for captives. Traditionally, when premiums are paid to carriers they hold and maintain any investment income earned on reserves. When funding these long-term liabilities through a captive, the investment income earned is held until the time of loss and stays within the captive.  These investment returns are substantial and serve as yet another benefit for placing disability coverages into the captive.

Having employee benefits (including LTD) in a captive provides the following advantages:

The biggest benefits for airlines placing LTD through their captive program is creating greater control of customization of coverage and are less susceptible to market volatility and pricing by moving away from the commercial market.

Having a combined P&C and employee benefits captive program, which incorporates LTD, would further strengthen the airline’s overall captive and risk management strategy by offering risk diversification, since LTD risks are unrelated to the existing P&C risks underwritten in the captive. Along with projected increased profits of the LTD line of coverage, this approach increases the number of statistically independent exposures, which improves the stability of the overall program. In addition to LTD, medical stop loss could also be added to the captive to protect against catastrophic claims and create more predictability.

Action Plan

LTD insurance for pilots has been an issue for years in the airline industry, and no optimal commercially available solution has come forth. Captive insurance has long been a strategic approach to niche or especially challenging insurance obstacles and essentially how and why captives were born. The LTD commercial market is prime for disruption, and for those willing to move towards a more flexible and beneficial program, a captive insurance company can provide an answer.


For the first time, the United States Department of Labor (DOL) has tentatively authorized an Employee Retirement Income Security Act (ERISA) exemption regarding pension plan risk transfer to a captive. Spring worked directly with this client through the process and once approved, the client is anticipated to receive $126.4 million in financial benefits from the DOL. Check out Captive Intelligence’s full article here.

Since I started my career in this space many moons ago, I have seen the captive industry continuously grow and evolve. There have been new risks, changes in regulatory and Department of Labor (DOL) policies and protocols, economic fluctuations, the addition of technologies, and the integration of captive programs focused on different lines, whether employee benefits or property and casualty (P&C). As I believe we are at the cusp of the next era of change for captives, I wanted to connect with captive owners and risk managers to gather their outlook on where we are today and where we’re headed.

I sat down with David Arick, who is currently the President of RIMS, the risk management society® and Managing Director, Global Risk Management at Sedgwick. He has previously held insurance and risk management roles at companies like International Paper and General Electric, and brings forth a wide range of experience spanning decades.

Q: How has the hard insurance market impact risk professionals’ ability to financial cover their organizations’ top risks?

A: Different industries have had different experiences in this market. My last job was in the packaging and forest products industry and it, along with other sectors like transportation, have been challenged. The hard market coupled with specific insurance conditions like nuclear verdicts and natural disasters on the P&C side have been driving up property costs. Cyber insurance has also faced obstacles. The economics of a specific company along with the insurance budgets that get blown out of the water really have people looking for alternatives like captives.

Q: What do you feel are some of the contributing factors that have led to the increased popularity in captives?

A: Aside from what I mentioned above, captives are no longer uncommon or kept behind closed doors; they are now a part of mainstream risk management and C-suites are willing to make the investment given the volatile insurance markets they are facing.

Q: What benefits are most appropriate for organizations to place in their captives? Have you seen any new developments in this area?

A: From a risk management perspective, I hear my fellow risk managers talking about three areas where benefits and captives can interplay:

  1. Global benefits. Risk managers are hoping that captives can help stabilize programs that historically were variable and volatile across different countries, particularly with a workforce moving between countries.
  2. Medical stop-loss. Captives are playing a huge role in this area where a risk manager can partner with HR in understanding stop loss buying options available thanks to the captive and also creating savings and flexibility within the program.
  3. ERISA benefits. Multinational companies have been focused here in terms of trends, take-up rates, etc. Benefits spend in the US is more significant than in other countries and to that end there is renewed interest in utilizing a captive to address these rising costs.
Q: I’ve heard you say before, “risk management is much more than buying insurance or financing losses,” can you elaborate on that statement a bit?

A: Both risk management and insurance buying are critical aspects of running a business. The point is that I would hope that risk management could be more strategic, aimed at creating risk awareness and focused on people, processes, and technology in addition to the more traditional items like mitigation plans, business continuity and the like.

Q: This year, as RIMS President, what are some of your priorities for the organization and the risk management profession overall?

A: I would like to improve the perception of risk management by increasing education and development for those in the field, so that we can more broadly speak the same language. RIMS has developed a global certification for risk management education called the RIMS-CRMP that is ANSI-accredited and meant to build credibility around the profession. We are investing in our future by highlighting the careers available and introducing risk management curricula to more colleges and universities. It’s important that we routinely assess how to support new talent that joins the field in their professional growth and that is what we’re focused on. 

Q: What insights can you offer a risk professional who is either considering starting a captive or who has just started one?

A: I promise you didn’t make me answer the question in this way, but I truly think organizations need to search for the best captive advisors and not just default to their primary brokerage team. An existing team may be sufficient in handling most needs, but a captive is unique and you need an expert team in place, from consultants to lawyers, to captive managers and the like. Secondly, I will say that a risk management professional needs to prioritize building internal support and alignment for an initiative like a captive, including finance, accounting, treasury, legal, and tax. Internal buy-in is critical to long-term success.

As society increasingly pivots towards clean and green energy solutions, driven by the imperative of sustainability and the dramatic effects of climate change, the energy landscape is undergoing a profound transformation. Companies across all industries are embracing renewable alternatives and adopting environmentally conscious practices. This shift can lead to many obstacles when it comes to liabilities and coverage. Last week, I had the pleasure of attending the International Risk Management Institute (IRMI)’s Energy Risk & Insurance Conference (ERIC) which tackled this very issue. Experts across the risk management industry convened to discuss emerging energy risks and potential solutions. I had the pleasure of presenting on this topic, “Captives—Too Late for Fossil Fuels or Too Soon for Green Energy?” and wanted to share some key insights.

The Legacy of Traditional Energy

For decades, traditional energy sources like coal, oil, and natural gas have served as the pillars of global energy infrastructure. These sources have powered industries, fueled transportation, and sustained economies worldwide. However, their reliance on finite resources and contribution to environmental degradation have brought their sustainability priorities into question.

While traditional energy remains deeply entrenched in global economies, its future is increasingly uncertain. Mounting pressure to reduce carbon emissions, coupled with the emergence of renewable alternatives, has catalyzed a shift towards cleaner energy sources.

The Promise of Renewable Energy

The rise of renewable energy technologies such as solar, wind, and hydroelectric power represents a socio-economic shift towards sustainability. These sources offer cleaner alternatives, reducing carbon emissions and mitigating the impacts of climate change. Their abundance and renewable nature make them promising candidates for a greener future.

However, the transition to renewable energy has its challenges. The intermittency of renewable sources coupled with the need for infrastructure investments, presents hurdles to widespread adoption. The inertia of traditional energy industries along with regulatory complexities further slow down the pace of transition.

The Role of Captive Insurance

Amidst this energy transition, captive insurance has been at the forefront for risk management teams trying to optimize coverage and reduce costs. With few regulations, many insurers are moving away from insuring coal and creating more inclusive policies for oil and gas. It is estimated that 62% of reinsurers now have coal exit policies and 38% have oil and gas exclusions as shift away from fossil fuels accelerates.1 Insurance coverages and costs coupled with sustainability priorities have many organizations questioning if switching to alternative energy sources is critical.

On the other end of the stick, insuring green/new energy has not been easy. Although we are seeing new coverages such as leakage insurance for CO2, and coverage for solar, hydrogen, and bioenergy, pricing and underwriting remain huge issues. With any new risks, there are still untested coverages and language that may lead to future conflict when claims are filed. Many insurers also worry about the scalability of the new coverages once many companies shift to green energy; how will the underwriting processes and pricing shift or scale once more companies adopt green energy?

This natural lack of transition had sprouted a giant funding dilemma of insuring energy companies. Although many large companies are self-insured and/or adopt captive insurance as a solution, often mid and smaller companies are stuck in no-man’s-land. Many of these companies are looking into alternative funding options, such as a group captive, to help share risks with similar organizations without paying obscene premiums. This allows mid and smaller energy companies to meet lender requirements at lower rates and reduce net costs through reinsurance.

Where are Things Headed?

I expect in the coming years we may see drastic changes in how energy companies are insured; a lot depends on how committed commercial insurers are to exiting certain industries and promoting new energy coverages. There seem to be certain lines/industries that scale faster, both with regard to comprehensive underwriting processes and pricing volatility. Another significant consideration is governmental/regulatory changes. With climate change as a major political issue, policyholders and insurance companies may need to adapt more quickly if regulations are passed pushing for the use of green energy.

In conclusion, the dichotomy between old and new energy and how to properly insure them is a hot-button topic in the risk world. As older energy sources, such as coal, are becoming more and more uninsurable, newer green energy sources are untested and challenging to underwrite. We are in an interesting position where insurance companies and policyholders know they must shift towards renewable energy but cannot properly insure it (yet). Although alternative funding options, such as captive insurance, have proved thus far to be a solution, there are still so many unforeseen variables that will undoubtedly affect how energy is insured.


In a recent podcast from Global Captive Podcast, president and CEO of edRISK, Tracy Hassett, and our SVP, Prabal Lakhanpal, dive into the history of edRISK and how educational institutions have been able to leverage a captive to reduce health insurance costs and reduce liability. You can find the full podcast episode here.

Our SVP, Prabal Lakhanpal, was featured in a panel discussion alongside other CICA NextGen participants to discuss how to best attract younger talent, obstacles the industry is currently facing, and the future of careers futures in captive insurance. You can find the full discussion here.