Should my company build a captive insurance capability?

I had not heard of captive insurance before you brought this question to the table, however, I might have been exposed to it at our last benefits renewal. It was presented to us as a wrap on top of our regular coverage. We were told it was very stable and the premiums we were quoted did show a healthy savings from one layer insurance, and didn't require us to make dramatic changes to our employees' coverage (i.e. deductibles, prescriptions, doctor's visits). We chose not to go this route for this year as the savings from another option practically matched what the wrap was going to provide - allowing us to stay with a major carrier. The one down side, in my opinion, was that there would be some additional reporting for the wrap to cover the difference in costs between the first layer and their protection.

If you are interested in pursuing this in more detail, I would highly recommend the insurance broker we are (now) using. They really impressed us with their knowledge and were able to put together multiple options when we were less than four weeks from our annual renewal. Feel free to reach out to me directly and I can share their contact information. The company is Cambridge Consulting and they are based in Troy, Michigan, with clients across the country.

Are you currently self insured with a stop loss? If so I do not see what advantage a captive would bring to you. It is all about claims cost at the end of the day. Depending on the size of your work force and your claims experience, and assuming you are self insured, the smallest cost is admin and stop loss coverage.
I do not see what not having manufacturing has to do with your health care costs as any injuries are covered by worker's comp. If you are not familiar with self funded plans feel free to contact me.

Captive insurance is a useful method of achieving certain goals if you have the appetite to self-insure and the capital to commit for a long period of time. Your question suggests that you perceive your exposure is lower than your current cost of risk transfer. We have developed and implemented captive insurance solutions for clients with environmental risks who similarly find the commercial insurance market is not providing adequate solutions, and who are seeking objectives such as long-term risk management and succession planning.

There are so many questions when you embark on a captive insurance arrangement. Be very careful. If you do not have access to information regarding your healthcare usage over time, you are gambling needlessly. A captive is a risk management tool that can be both effective and lucrative, if you believe you can fully quantity the probability of losses.

The first approach you should take to control health insurance costs is to explore some level of self-insurance. There is no guarantee that this approach will save you money but it is a common way, especially for those organizations with significant premiums, to save money over a period of five or so years.

Creating a captive insurance subsidiary is a more common approach for risks associated with workman's compensation, liability, etc. Depending on your organization, they can be a good tax strategy to accelerate deductions. Captives are normally created by companies that already are mostly self-insured for their risks. They can have significant administrative costs associated with them so you should evaulate closely before implementing. I recommend seeking professional advice both from your tax experts and insurance brokers.