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Captives are becoming a strategic tool for retail, wholesale, food and beverage companies

Captives are a strategic risk financing tool that can help manage casualty, property, cyber, and supply chain volatility.

09/25/2026 · 6 minute read

Rising casualty costs, property losses, supply chain disruptions, cyber threats, product recall exposures, environmental concerns, and continued pressure on margins are creating a more difficult operating environment for retail, wholesale, and food and beverage companies.

For many organizations like yours, this evolving risk landscape requires a fresh look at how risks are financed. And this has led to an increase in the number of retailers, wholesalers, and companies across the food and beverage industry turning to captives to supplement traditional insurance programs and provide increased flexibility.

Over the past three years, Marsh has seen a year-on-year growth of between 15% and 20% in captive formations for the retail, wholesale, and food and beverage sectors, with a premium volume growth of between 10% and 15%. Retail and wholesale organizations account for roughly 80% of Marsh-established captives in the sector. Marsh data shows that retailers and wholesalers have also consistently ranked among the top three industries using captives, while food and beverage companies have ranked among the top five industries for growth in both the number of captives and the percentage of premium written in the captive.

This points to an environment where captives are not being used solely as a response to difficult insurance conditions. They are increasingly being treated as long-term strategic assets.

A broader reason to consider captives

Historically, companies often turned to captives when commercial insurance became too expensive, too restrictive, or too difficult to access. While for some organizations, a difficult insurance market remains an important catalyst for creating a captive, it is no longer the only reason.

Today, more companies are evaluating captives through a broader lens and considering how a captive can help mitigate some of the most straining risk financing challenges. This shift reflects a more strategic mindset, one focused on gaining greater control over total cost of risk, smoothing volatility, financing hard-to-place exposures, and creating more flexibility over time. For businesses operating on tight margins, the ability to manage swings in cost and retain more control can be especially valuable.

Further, companies with an established captive are often better positioned to respond when conditions change. Rather than trying to stand up a structure under time pressure, the vehicle is already in place can be adapted as needs evolve.

Casualty risk is often a captive starting point

Because casualty exposures — including workers’ compensation, general liability, and auto liability — tend to be high-frequency losses that often make up a good proportion of losses for retail, wholesale, and food and beverage companies, many retail, wholesale, and food and beverage companies set up a captive with the intention of financing these lines of coverage.

Property is another common area of focus, particularly as insured values and pricing pressures have increased. From there, many organizations expand into other lines as their captive strategy matures.

In fact, companies in this sector tend to write, on average, five lines of coverage in Marsh-set captives — a strong indicator that companies are using captives for more than a single problem or a single market moment.

Further, even when it was originally set up as a mechanism for financing a limited number of risks, a captive can evolve into a broader platform that supports a changing enterprise.

Retailers, wholesalers, and food and beverage companies commonly write the following lines of coverage in their captive:

  • Casualty, including workers' compensation, auto liability, general liability, and umbrella/excess layers
  • Property

Emerging lines of coverage written in captives in this sector include:

  • Cyber
  • Product recall
  • Supply chain risk
  • Environmental liabilities
  • Employee benefit programs

Captives are not only for the largest organizations

While large companies continue to be significant captive users, they are by far not the only ones setting up a captive. Mid-sized companies are increasingly evaluating captives as well, helped in part by the availability of different structures.

Single-parent captives remain common, particularly for larger organizations and more mature programs. But cell structures are making captives more accessible to companies that want a faster, lower-cost entry point or that are exploring the concept for the first time. For some, a cell can be an effective way to get started, test the structure, and build confidence before deciding whether a single-parent captive is the right long-term destination.

The key consideration is to determine which structure fits the organization’s objectives, timeline, scale, and long-term strategy.

Building a successful captive strategy

While each organization’s risk profile, operating model, and growth ambitions are different, the companies that get the most value from a captive typically approach it as a deliberate, enterprise-level decision — not simply as an insurance mechanism. This means grounding the strategy in business priorities, using data to guide decisions, aligning stakeholders early, and continuing to evaluate the captive as the organization evolves.

Some actions to consider include:

A captive should support a company’s broader risk financing strategy, not dictate it. The first question is not how much risk can be pushed into a captive, but how much risk the organization is comfortable retaining and why. When companies begin with a clear understanding of their risk tolerance, financial objectives, and operating priorities, they are better positioned to determine whether a captive is the right tool and how it should be used over time.

Loss history, benchmarking, capital efficiency, market conditions, and feasibility assessments help companies evaluate where a captive may create value and which lines of coverage make the most sense to include. A fact-based approach is especially important for organizations that are already operating under tight margins and managing a wide range of evolving exposures.

The most successful captive programs are shaped with input from risk management, finance, treasury, tax, legal, and operations from the outset. Early alignment helps organizations establish governance, clarify objectives, and avoid misunderstandings later in the process. It also creates a stronger foundation for decision-making, particularly when the captive is expected to support broader business goals.

The most successful captive programs are shaped with input from risk management, finance, treasury, tax, legal, and operations from the outset. Early alignment helps organizations establish governance, clarify objectives, and avoid misunderstandings later in the process. It also creates a stronger foundation for decision-making, particularly when the captive is expected to support broader business goals.

As the risk landscape continues to evolve, it is a good practice to revisit your risk financing strategy and determine whether setting up a captive, or expanding an existing one, aligns with your organizational strategy and can help you improve overall resilience.

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