Contributed by ICCIE Board Member and ACI Graduate, Linda Syth
Being a captive owner has many phases. From exploration to novice to mature each phase has its nuances. In the beginning. the most critical aspect for our organization was education. When I reflect on our captive analysis, it began pretty typically. Explore the Internet. Buy books. Talk to others. What that review told me is that we were in new waters and needed help, so we hired expertise to develop a captive feasibility review. That led to legal, captive management, financial, audit and actuarial expertise guiding us along the way. During the process we often found ourselves knee-deep in jargon and statutes we had never encountered. We asked a lot of questions and eventually went to a captive conference to learn more. It wasn’t until we were up and running that our team found out about ICCIE and the captive education designation. The classes look intriguing, but quite a commitment. However, clearly moving forward with the captive was a commitment as well, so we plunged ahead.
We are now six years into our captive so still, in many ways, feel like novices as our professional liability risk has a long tail. While outside expertise has been important, nothing has been more essential than truly understanding our claims. Whether looking for trends or addressing concerning outliers, our Board discovered that we needed to develop better tools to take a deeper dive into the data. We had no history of actuaries or analysts on our team but through a partnership with a university, we dipped our toe in the water by developing internship programs which eventually led to in-house expertise. As captive owners, it is easy with all the outside service providers to count too heavily on them and lose touch with our reasons for pursuing a captive. A dashboard (posted below) developed by our analyst team has allowed us to keep top management and the Board closely connected with our captive efforts.
While not a mature captive, we have begun to assess whether all the risk currently in our captive still makes sense given the marketplace and our own organization’s priorities. It can be tempting to put your efforts, if profitable, on cruise control, but the environment is changing so rapidly that continual evaluation is key.