Other Insurance Funds (NAICS 525190) — A U.S. Industry Primer

1. Overview

"Other Insurance Funds" is one of the least visible corners of U.S. finance, yet it channels tens of billions of dollars a year. The industry — North American Industry Classification System (NAICS) code 525190 — is made up of pooled legal vehicles ("funds") organized to provide insurance for the sponsor, firm, or its own employees or members, rather than to sell policies for profit to the general public.[1] The clearest examples are state workers'-compensation (WC) funds (such as the New York State Insurance Fund and Ohio's Bureau of Workers' Compensation), group self-insurance funds run by employers with similar exposures, and captive insurers owned by a single parent company.[1][6]

This is a legal-entity category, not a conventional operating industry. The underlying funds often have little staffing, limited public disclosure, and no publicly traded equity — the money and the risk sit in the vehicle, while the people who run it (portfolio managers, claims administrators) are counted in other industries.

Why would an investor care about a category with almost no tickers? Two reasons. First, these funds sit on very large, long-duration investment portfolios — the three largest state WC funds alone hold on the order of $70 billion in invested assets between them[9][10][11] — so they are meaningful buyers of bonds. Second, they are the private-market alternative that competes with, and steadily drains business from, the publicly traded property-and-casualty (P&C) insurers investors can buy.

• Public-market ways in: none directly. The closest listed exposure is the service layer (brokers and captive managers, claims administrators) and the WC carriers that compete with these funds — both in different NAICS codes, covered in Sections 4 and 10.
• Private-market ways in: this is fundamentally a members-and-mutuals world. "Investing" usually means joining or forming a vehicle — a captive, a group self-insurance fund, or a risk retention group (RRG) — to lower your own cost of risk, or acquiring the private service firms (claims administrators, captive managers) that operate around the funds. There is no outside equity to buy in a state fund or a member-owned pool.

2. What it is and how it's structured

Official scope. NAICS 525190 covers "legal entities (i.e., funds (except pension, and health- and welfare-related employee benefit funds)) organized to provide insurance exclusively for the sponsor, firm, or its employees or members."[1] In plain terms: pooled money organized to self-insure a defined group, not to write insurance for anyone who walks in the door. Self-insurance funds and workers'-compensation funds are explicitly included.[1] The code sits inside industry group 5251, "Insurance and Employee Benefit Funds," in the Finance and Insurance sector (52).[1]

The main building blocks in practice:

• State WC funds — government or quasi-government funds created by statute so every employer can buy mandated WC coverage; in some states they are the "insurer of last resort."[6][15]
• Pure (single-parent) captive — a subsidiary a company sets up to insure its own risks, capturing the underwriting margin and investment "float" in-house rather than paying it to a commercial carrier.[5]
• Group captive / risk retention group (RRG) — several organizations with similar exposures pool capital and losses. An RRG is owned by its insured members (every owner must also be an insured) and operates under state insurance law and the federal Liability Risk Retention Act (LRRA) of 1986.[7]
• Group self-insurance fund — several employers in one industry pool their WC (or other) risk under state approval, usually with joint-and-several liability: each member can be assessed for the whole pool's shortfall.[16]

Ownership therefore varies: sponsor-owned captive (owned by the parent), member-owned group or RRG (owned by the insureds), mutual insurer (owned by policyholders), trust/benefit fund (governed by trustees), or public fund (controlled by a government entity). Investor-owned, publicly traded ownership is rare by design — these vehicles exist to serve their members, not outside shareholders.

What it EXCLUDES (and where those activities live):

That last boundary is the key one and it is genuinely blurry. Several large mutual WC insurers (for example Texas Mutual and Colorado's Pinnacol Assurance) began as state funds and now operate like carriers, so they straddle 525190 and 5241.[12][13] The cleanest 525190 members are the still-governmental state funds and the member-owned self-insurance pools and captives. A company that merely administers a fund, or a commercial insurer that competes with one, is normally classified elsewhere.[1]

3. How big it is

This is a case where standard federal business statistics structurally undercount the industry, so the honest answer combines the one figure the government publishes with entity-level evidence.

• Our ground-truth federal figure: the U.S. Small Business Administration (SBA) size standard for NAICS 525190 is $40 million in average annual receipts — the ceiling below which a firm counts as "small" for federal programs. It is an eligibility threshold, not a measure of industry revenue, assets, premiums, or fund size.[2]
• What we do NOT have in our federal ground-truth set: a verified establishment count, revenue total, employment total, payroll, premium, or asset figure for 525190. We are not going to invent one, and we do not report any suppressed value.
• Why the usual counts are misleading: funds and trusts (the whole 525 subsector) "earn interest, dividends, and other investment income, but have little or no employment and no revenue from the sale of services,"[3] and the Census Bureau's Statistics of U.S. Businesses (SUSB) — its main employer-business series — excludes this activity along with most government-employee establishments.[4] The people who actually run the money are counted elsewhere (portfolio managers in 5239, claims administrators in 524292).[1] A headcount- or payroll-based tally of 525190 would therefore show a negligible industry that bears no relation to the dollars flowing through it.

A truer sense of scale comes from the entities themselves. The largest single members are the state WC funds:

• Ohio Bureau of Workers' Compensation (BWC) — the largest state-operated fund, roughly $28 billion in assets, sole provider to about 249,000 employers.[10]
• New York State Insurance Fund (NYSIF) — about $24 billion in admitted assets and $1.69 billion in net written premium (2024), the largest WC carrier in New York.[9]
• California State Compensation Insurance Fund (SCIF) — about $21 billion in assets and roughly $1 billion of 2024 premium.[11]

On the self-insurance side, captives are the fast-growing piece. Vermont — the world's leading captive domicile — had 683 active captives at the end of 2024, which wrote roughly $30.6 billion of gross premium in 2023; globally there were an estimated 8,000 captives writing about $50 billion of premium in 2024.[14] Not every captive is U.S.-domiciled or classed in 525190, but the trend shows how much risk is being pooled outside conventional carriers.

Bottom line: measured by employees, 525190 looks negligible; measured by the assets and premium flowing through its funds, it is a multi-hundred-billion-dollar pool of capital. A precise market-share ranking would require stitching together insurance-regulator filings, captive registries, WC data, and private-company disclosures — no single federal series captures it.

4. The investable universe

There is no clean public-company table for this industry, because the archetypal 525190 entity is not investable as equity. State funds are governmental; self-insurance funds, group captives, and RRGs are owned by their members; single-parent captives are owned by one company. That is a feature, not an oversight — these vehicles are built to return value to members (through lower cost of risk and dividends), not to outside shareholders.

Largest 525190-type entities (all private / governmental / mutual — not buyable as shares):

The nearest public-market proxies are NOT insurance funds. They fall in two buckets — treat both as exposure to the same risk pool, not as 525190 plays, and do not attribute a diversified firm's whole revenue or valuation to this code. The relevant slice is usually a small, undisclosed part of a broader business.

Service layer — brokers, captive managers, and claims administrators (fee-based) [17]:

Carriers that compete with the funds (risk-bearing, NAICS 5241) [17]:

Private owners and operating analogues (the direct ownership layer is mostly private or non-corporate):

• Sedgwick — a major claims-management and loss-adjusting firm; Carlyle retains control, with Stone Point, Altas Partners, CDPQ, Onex, and management as minority investors.[18]
• AmTrust Financial Services — privately held specialty P&C insurer with a significant WC focus.[19]
• Liberty Mutual — large private mutual P&C group with WC operations; capital is managed for policyholders, not public shareholders.[20]
• Private captive sponsors and member pools — large employers, trade associations, and professional groups own pure captives, group captives, or RRGs; ownership is entity-specific and rarely in any consolidated public database.[5][7]

5. How the money works

Because these funds are not built to maximize shareholder profit, judging them by ordinary earnings misses the point. A simplified flow: contributions or premiums → reserves and claims → administration and reinsurance → investment income → retained surplus, member dividends, or lower future contributions. Owners "make money" — really, save money and stay solvent — through four levers:

1. Premiums vs. losses — the combined ratio. The combined ratio adds claims plus expenses and divides by premium; below 100% is an underwriting profit, above 100% a loss. Unlike a public carrier chasing profit, a fund's target is often near 100% — charge members just enough and let investment income cover the rest.[11]
2. Investment income on "float." WC is a long-tail line: premiums come in now, claims pay out over years or decades. The reserves sit in a bond-heavy portfolio and throw off income — this is the engine. California's SCIF earned $572 million of investment income in 2024, comparable to its entire premium base that year.[11] The bigger and longer the reserve, the more it earns.
3. Surplus adequacy. Surplus is the capital cushion above reserves. Regulators and rating agencies watch surplus-to-premium and risk-based capital (RBC); a strong cushion (NYSIF reported roughly $11.4 billion of surplus in 2024[9]) lets a fund absorb bad claim years and keep writing.
4. Returning the excess to members. Mutuals and state funds hand surplus back as policyholder dividends rather than paying outside shareholders. Texas Mutual paid a $340 million dividend in 2023 — its 25th straight year, over $4 billion returned since 1999.[12] California's SCIF declared a $149 million (~15% of premium) dividend for the 2024 policy year.[11] For members, that dividend is the return on being an owner.

For self-insured employers, group funds, and captives, the arithmetic differs slightly: the payoff is the gap between what commercial insurance would have cost and the group's own retained losses plus administration and reinsurance. They typically buy excess (stop-loss) reinsurance to cap tail risk, and the retained underwriting margin and float stay with the members or parent.[14][16]

Metrics that matter when sizing up any of these vehicles: loss ratio, expense ratio, combined ratio, reserve development (adverse development signals under-reserving), claim frequency and severity, retention/attachment point (how much risk is kept before reinsurance kicks in), investment yield, and RBC or equivalent capital adequacy. The central distinction is between underwriting income, fee income, and investment income: a claims administrator can earn steady fees without bearing claims risk, while a captive may show attractive long-run economics yet suffer sharp losses from a few severe claims.

6. What drives demand

• Payroll and employment. WC premium is roughly payroll × a rate, so demand tracks jobs, wages, and industry mix directly. More workers and higher wages mean more premium.[11]
• The commercial insurance price cycle. When commercial P&C pricing is "hard" (rising), more employers flee to self-insurance and captives to control cost — a big reason captive counts have surged; when pricing softens, some drift back. This makes the self-insurance/captive slice counter-cyclical to carrier pricing.[5][14]
• Claims-cost inflation. Medical costs, litigation, wage replacement, prescription drugs, and claimant duration drive loss severity and the reserves funds must hold.[6]
• Injury frequency. Long-run declines in workplace injuries (safety, automation, the shift toward services) have softened WC loss costs for years, holding premiums down.[17]
• Interest rates. Because investment income is the profit engine, higher rates are a direct tailwind for funds sitting on large bond portfolios.[9][11]
• State rules and statutory mandate. Nearly every state requires most employers to carry WC, so baseline demand is non-cyclical — the only question is which vehicle carries the risk. Rules vary: Texas notably lets employers opt out of the conventional WC system entirely.[6][15]
• Data and technology. Better claims data, fraud detection, and medical-cost control favor scaled TPAs and technology-enabled administrators, and can pull risk toward self-insured structures.[5]

7. Regulation

Insurance in the U.S. is regulated primarily at the state level (under the federal McCarran-Ferguson framework, with model laws coordinated through the National Association of Insurance Commissioners, or NAIC). For 525190 specifically:

• State funds are creatures of state statute; their mandate, governance, and (in monopolistic states) monopoly are set by law.[6][15]
• Self-insurance requires state approval. Employers or groups typically file audited financials, post security (surety bonds or letters of credit), buy excess/stop-loss reinsurance, and join a self-insurance guaranty fund that backstops injured workers if a member defaults.[16]
• Group self-insurance funds carry joint-and-several liability — solvent members can be assessed to cover a failed member's obligations — the central risk of that structure.[16]
• Captives are regulated by their domicile (Vermont being the largest U.S. one), under solvency-focused but generally lighter-touch rules designed to attract formations, with licensing, minimum capital, reserve, investment, and examination requirements.[5][14]
• RRGs get special treatment under the LRRA: domiciled and licensed in one state, they can write liability coverage in other states after registration.[7]
• Monopolistic states — Ohio, North Dakota, Washington, and Wyoming — bar private carriers from writing WC; employers must buy from the state fund. Other jurisdictions with state funds run them as competitive options alongside private insurers.[15]

Note the boundary: the federal Employee Retirement Income Security Act (ERISA) of 1974 governs most private-sector retirement and health plans but generally does not cover plans maintained solely to comply with WC, unemployment, or disability laws — one reason pension and health/welfare funds sit in NAICS 525110/525120, not 525190.[8][1] Investors should also weigh guaranty-fund and security rules, collateral/reinsurance requirements, trustee and fiduciary duties, and the tax treatment of captive premiums and reserves (a recurring IRS scrutiny area).

8. Competitive dynamics and consolidation

Competition runs among four alternatives: commercial insurance, employer self-insurance, captive/group-pool risk retention, and hybrid structures (a TPA plus a fronting insurer plus reinsurance). The decisive advantages are claims history, actuarial expertise, regulatory licenses, capital, provider-negotiation power, technology, and reinsurance access.

• State funds vs. private carriers. In the roughly 19 competitive-fund states, funds like NYSIF, SCIF, and Texas Mutual compete head-to-head with commercial insurers, often winning share by pricing to cost and paying dividends; in the four monopolistic states there is no competition at all.[11][12][15]
• The long privatization/mutualization trend. Several state funds have converted toward private ownership. Texas turned its state fund into policyholder-owned Texas Mutual; Colorado spun its fund into the quasi-public Pinnacol Assurance, whose full privatization was proposed by the governor in 2025; Employers Holdings (EIG) traces its roots to Nevada's former state fund and now trades publicly — the clearest case of a 525190-type entity crossing all the way into public equity.[12][13][17] These conversions are episodic but investable: they can turn member value into tradable shares.
• Consolidation is concentrated in the service layer. Aon, Marsh, and Gallagher combine brokerage, risk advice, analytics, claims, and captive services, while Sedgwick has drawn large private-equity ownership.[17][18] The funds themselves are harder to consolidate — each is built for a specific sponsor or member group. Meanwhile the structural story of the last decade is risk migrating out of commercial carriers into member-owned vehicles (an estimated 8,000 captives globally by 2024, ~$50B of premium) — a slow, persistent share shift away from listed P&C insurers.[14]
• Periodic pool failures. Group self-insurance funds occasionally become insolvent, triggering member assessments and guaranty-fund claims — a recurring, if localized, cleanup force.[16]

9. Risks

• Long-tail reserve risk. WC claims develop over decades; under-reserving or a jump in medical inflation can erode surplus years after a policy was written.[9][11]
• Medical and legal inflation. Higher treatment costs, litigation, wage replacement, and claimant duration lift loss severity.[6]
• Investment risk. Because investment income is the profit engine, funds are exposed to interest-rate, credit, and (to a lesser extent) equity moves in their large portfolios — and reserves can be forced to sell when claims payments accelerate.[9][11]
• Adverse selection and catastrophic claims. A pool can attract worse-than-expected risks, and a handful of severe injuries can overwhelm a lightly capitalized fund.[5][16]
• Joint-and-several assessments. Members of a group self-insurance fund can be billed for a co-member's default — a real, sometimes large, contingent liability.[16]
• Reinsurance counterparty and sponsor-concentration risk. The fund stays exposed if a reinsurer fails or disputes coverage; a single-parent captive is only as strong as its parent.[14]
• Political and privatization risk. State funds face asset-transfer, mandate, and privatization decisions driven by politics, not markets (e.g., the 2025 Pinnacol proposal).[13]
• Regulatory/benefit change. Statutory benefit expansions — such as presumption laws that make certain illnesses automatically compensable — can raise claim costs quickly; capital and tax rules can shift the economics.[16]
• Opacity and service-provider dependence. Private funds may not disclose enough to value from the outside, and a TPA failure, cyberattack, or poor claims process can damage both economics and reputation.

10. How to invest, and the outlook

Public-market routes. There is no direct pure-play, so equity exposure to the same underlying risk pool comes two ways: the service layer (Aon (AON), Marsh & McLennan (MMC), Arthur J. Gallagher (AJG), CorVel (CRVL)), which earns recurring fees without bearing claims risk, and the carriers that compete with the funds (focused names like AMERISAFE (AMSF) and Employers Holdings (EIG), or diversified P&C insurers Travelers (TRV), The Hartford (HIG), and Berkshire Hathaway (BRK.A/BRK.B), whose float-driven economics mirror how the funds make money).[17] For risk-bearing insurers, examine WC premiums, loss and combined ratios, reserve development, capital strength, investment results, and reinsurance; for TPAs and captive managers, focus on recurring fee revenue, retention, service margins, and acquisition integration. Keep the distinction clear — these are NAICS 5241/524292/5239 businesses, not 525190 funds — and watch for state-fund conversions: a privatization like the proposed Pinnacol deal is the rare event that creates a genuinely new public security in this space.[13]

Private-market routes. For a business owner or institution, "investing" here usually means participating: forming or joining a captive to keep underwriting margin and float in-house, entering a group self-insurance fund or RRG to cut the cost of mandated coverage, acquiring a private claims administrator or captive-management firm, or — for fixed-income investors — buying the bonds or providing the reinsurance these funds rely on. Diligence should cover ownership and governance rights, actuarial reserves and claims history, sponsor/member concentration, retention and reinsurance attachment points, collateral and capital requirements, TPA performance and data quality, licensing and regulatory history, and likely exit buyers. The return shows up as a lower cost of risk and policyholder dividends, not a share price.[12][14][16]

Near-term outlook (forward-looking). The WC market is soft: declining injury frequency and ample industry capital are holding premiums down, which pressures top-line growth for both funds and listed carriers even as it supports profitability.[17] Two structural forces look likely to persist: higher interest rates boosting the investment income that is these funds' core engine, and continued migration of risk into captives and self-insurance as buyers seek control over volatile commercial pricing.[14] Fee-based administrators and captive managers should generally offer steadier economics than the funds that bear claims risk. The wildcard is state-fund privatization — episodic, politically driven, and the main way value locked inside this private industry occasionally becomes something a public investor can buy.[13] These are judgments about direction, not guarantees; the pricing cycle and reserve development can move faster than expected in either direction.

---

Sources

1. U.S. Census Bureau, "2022 NAICS Definition — 525190 Other Insurance Funds (definition, examples, exclusions)," 2022. https://www.census.gov/naics/?details=525190&input=525190&year=2022 (see also https://www.naics.com/naics-code-description/?code=525190)
2. U.S. Small Business Administration, "Table of Small Business Size Standards (NAICS 525190 = $40 million average annual receipts)," 2023. https://www.sba.gov/document/support-table-size-standards
3. U.S. Bureau of Labor Statistics, "Funds, Trusts, and Other Financial Vehicles: NAICS 525 (Industries at a Glance)," 2025. https://www.bls.gov/iag/tgs/iag525.htm
4. U.S. Census Bureau, "About Statistics of U.S. Businesses (SUSB) — coverage and exclusions," 2026. https://www.census.gov/programs-surveys/susb/about.html
5. National Association of Insurance Commissioners, "Captive Insurance Companies," 2026. https://content.naic.org/insurance-topics/captive-insurance-companies
6. National Association of Insurance Commissioners, "Workers' Compensation Insurance," 2026. https://content.naic.org/insurance-topics/workers%27-compensation-insurance
7. National Association of Insurance Commissioners, "Risk Retention Groups" (Liability Risk Retention Act of 1986), 2025. https://content.naic.org/insurance-topics/risk-retention-groups
8. U.S. Department of Labor, "Employee Retirement Income Security Act (ERISA)," 1974. https://www.dol.gov/general/topic/retirement/erisa
9. New York State Insurance Fund, "2024 Annual Report," 2025. https://ww3.nysif.com/-/media/Files/NYSIF_Publications/PDF/ANNUAL_REPORTS/Annual_Report_2024_FULL.pdf
10. Ohio Bureau of Workers' Compensation — overview and financials (Wikipedia summary of Ohio BWC), 2025. https://en.wikipedia.org/wiki/Ohio_Bureau_of_Workers%27_Compensation
11. State Compensation Insurance Fund (California), "State Fund Facts," 2025; and Insurance Journal, "California State Fund Declaring 15% Dividend for 2024 Policy Year," 2025. https://www.statefundca.com/about/fact-sheet/; https://www.insurancejournal.com/news/west/2025/01/02/806581.htm
12. Texas Mutual Insurance Company, "About Texas Mutual / 2023 Year in Review," 2024; and Insurance Journal, "Texas Mutual Approves $340M Dividend Distribution," 2023. https://www.texasmutual.com/abouttxm/; https://www.insurancejournal.com/news/southcentral/2023/05/02/718821.htm
13. The Bell Policy Center, "In The Know: Pinnacol Assurance," 2024; and Colorado Politics, "Gov. Jared Polis' plan to privatize Pinnacol Assurance comes with legal questions," 2025. https://bellpolicy.org/in-the-know-pinnacol-assurance/; https://www.coloradopolitics.com/2025/11/03/gov-jared-polis-plan-to-privatize-pinnacol-assurance-comes-with-legal-questions/
14. Vermont Department of Financial Regulation, "Vermont Captive Data," 2025; and Captive.com, "US Captive Insurance Growth Surges in 2024," 2025. https://dfr.vermont.gov/captive-insurance/vermont-captive-data; https://www.captive.com/news/us-captive-insurance-growth-surges-in-2024
15. The Hartford, "Monopolistic State Funds for Workers' Comp," 2025; and Insureon, "Monopolistic Workers' Compensation States" / "What Is a Workers' Compensation State Fund?," 2026. https://www.thehartford.com/workers-compensation/monopolistic-states; https://www.insureon.com/small-business-insurance/workers-compensation/monopolistic-states
16. Texas Department of Insurance, "Workers' Compensation Self-Insurance Groups," 2025; and New York Workers' Compensation Board, "Group Self-Insurance," 2025. https://www.tdi.texas.gov/insurer/sigpage.html; https://www.wcb.ny.gov/content/main/SelfInsureds/selfins_wc_group.jsp
17. Market quotes and company profiles (approximate market values as of mid-2026) for AMERISAFE (AMSF), Employers Holdings (EIG), Aon (AON), Marsh & McLennan (MMC), Arthur J. Gallagher (AJG), CorVel (CRVL), Travelers (TRV), The Hartford (HIG), and Berkshire Hathaway (BRK.A/BRK.B), via Yahoo Finance. https://finance.yahoo.com/quote/AMSF/; https://finance.yahoo.com/quote/EIG/
18. Sedgwick, "Sedgwick Announces Investments from Altas Partners, Carlyle and Stone Point," 2024. https://www.sedgwick.com/id/press-release/sedgwick-announces-investments-from-altas-partners-carlyle-and-stone-point/
19. AmTrust Financial Services, "2025 Annual Business & Sustainability Review," 2025. https://amtrustfinancial.com/
20. Liberty Mutual Group, "Corporate Information / About Liberty Mutual," 2026. https://www.libertymutualgroup.com/about-lm