The hunt for affordable reinsurance has leapfrogged concernsabout finding fronting companies among captive insurers, accordingto an annual survey by the Captive Insurance CompaniesAssociation.

“Reinsurance was clearly a concern–it showed up on more radarscreens than previously,” Michael R. Mead, who helps conduct thesurvey, said here during CICA's annual conference.

Among the other concerns cited by those surveyed, noted Mr.Mead, “collateral seemed to be going up [in importance]; policylanguage was tightened; autonomy was more restricted.”

He noted that finding domestic carriers to “front” for captiveshas been less of a concern in the past few years because the marketfor fronting services “seems to have stabilized.” The survey alsoindicated that fronting insurers are doing a better job.

Forty-four percent of respondents had fronting costs that were 5percent of annual premium, while 37 percent reported spending6-to-10 percent of premiums.

Nineteen percent spent more than $200,000 on fronting costs in2006, while 25 percent spent that amount in 2005. However, on thehigher end of the captive spectrum, 17 percent spent more than $1million on fronts last year, versus 10 percent in 2005, CICAsaid.

When asked the primary reason they use a fronting carrier, 41percent cited the need for admitted paper, 29 percent citedregulatory compliance, 9 percent said they needed a front primarilyfor its support services, 8 percent noted a global strategy, 5percent cited marketing considerations, 4 percent reported anenhanced tax position, and 4 percent cited “other” reasons,according to CICA.

Mr. Mead said a goal of CICA is to get more cooperation fromstate associations to get the word out to captive owners about thesurvey.

The Vermont Captive Insurance Association and the ArizonaCaptive Insurance Association were instrumental in contactingmembers, he said. “We just need to get more responses and get morestate associations to work with us.”