Captive insurance increasingly popular as a strategic tool

Captive insurance, a method of self-insurance once thought of as a niche product, is now a strategic tool for a growing number of organizations.

It’s been a minute since CFO Brew last visited the topic, so here’s a quick refresher: A captive is a special type of insurance company that insures its parent company or companies, though it can cover other organizations beyond that.

Captives “have moved from tactical cost-management vehicles to central elements of enterprise risk strategy,” the insurance brokerage and risk management advisory firm Marsh noted in its 2026 Captive Benchmarking Report.

“From my perspective, risk management is about identifying [risk] exposures, understanding their potential financial impact, and determining the most efficient way to mitigate or finance them,” Gary Vecchiarelli, president and CFO of digital infrastructure and data center developer CleanSpark, told CFO Brew. “And a captive can be one component of that strategy, particularly for exposures that are measurable, relatively predictable, and within our financial capacity to retain.”

In its benchmark report, Marsh revealed the captives that it manages wrote $79.1 billion in premiums last year. This was nearly in line with the $77 billion of premiums written in 2024, but the increase was stronger among Fortune 500 companies (9% year over year). Meanwhile, the number of Marsh-managed captives formed in 2025 grew 25% to 118.

As accounting firm Cherry Bekaert observed in its midyear insurance industry report, captive insurance has shed its decades-old reputation as “a niche alternative or…a tax-planning device” to one that’s in “the mainstream of corporate risk and capital strategy.” This shift comes after years of increasing insurance rates and retentions, and waning coverage capacity.

A captivating strategy. CleanSpark formed a captive in October as a way to retain some of the risk on its infrastructure and equipment, according to Vecchiarelli. The captive plan isn’t meant to fully replace traditional insurance, Vecchiarelli made clear. Rather, it’s “another layer within a comprehensive risk management framework.”

The company’s property/casualty insurance bill was approaching $9 million in premiums. It formed a captive to cut down on that bill by “a couple million dollars,” he said. Rather than put all that risk-transfer capital in the pocket of insurers, CleanSpark can keep some of it in-house through the captive and “create this rainy day fund to pay for any losses that potentially could happen.”

The captive falls within the “first layer” of CleanSpark’s coverage tower, meaning it’s the first policy triggered after a loss event, up to a certain dollar figure, and the most expensive. Another insurance policy sitting at the second layer would kick in to cover additional losses beyond that, and so on.

Vecchiarelli did not specify how much the CleanSpark captive was covering as the first layer, but said the total coverage limit was around “a couple hundred million dollars.”

“Ultimately, our objective is to protect the balance sheet, preserve liquidity, and ensure that unexpected events don’t compromise our ability to execute our growth strategy,” Vecchiarelli said.

Team lift. Setting up the captive program required a team of internal and external players.

Internally, Vecchiarelli worked alongside the company’s chief accounting officer, legal counsel, and VP of digital asset management, whose main responsibility is to manage the company’s bitcoin holdings that are valued more than $1 billion. Cleanspark capitalized its captive both with cash and bitcoin.

“We’re bullish on bitcoin, and so we have this large bitcoin balance on the balance sheet, and the way we view it is, it’s liquidity,” Vecchiarelli said. The VP of digital asset management’s job is “to find ways to monetize that bitcoin without selling it, such as trading derivatives or doing covered calls.”

“Whether it’s bitcoin or cash that you’re using to capitalize the captive, when you look at how much net it will save…you end up having a greater return than if that if that working capital were elsewhere on the balance sheet,” he said.

CleanSpark recruited an insurance broker to help form and administer the captive. The broker’s contributions included conducting a captive study and identifying the best jurisdiction in which to form the captive.

Opportunities abound. Beyond insuring its buildings and equipment, CleanSpark has the opportunity to cover other risks through its captive, Vecchiarelli said. It may even eventually insure risk for some of its peers, though such a decision is “on the longer term horizon,” he said.

The most popular risks covered by captives last year included property, excess and auto liability, and workers’ compensation, according to the Marsh report. Captives also covered some emerging risks that “reflect economic, technological, and environmental concerns,” like trade credit and political risk.

Vecchiarelli said of his company’s new captive: “The sky’s the limit on what risk we can manage.”