Though often poorly understood in the broader insurance marketplace, captive insurance companies and program business, can present compelling opportunities for business expansion and transforma­tion – particularly in complex, arcane or otherwise underserved markets that require special expertise for underwriting and coverage. During a recent PropertyCasualty360 web seminar on the topic, three Zurich programs and captives specialists sought to demystify these two specialized approaches to insurance by addressing key questions including:

• What constitutes a program or captive and what advantages can they offer beyond traditional coverage?
• How do you go about moving a book of business into a program?
• What makes for a good captive candidate and how can they fit clients of various sizes?
• How can you leverage the various options available for single-parent captives?

Defining Programs and Captives

Programs and captives share a number of common features, but are structured differently and serve distinct purposes.

The simplest definition of a program is when "an insurance carrier grants underwriting authority to a program administrator," explained the first presenter, Brian Kenny, who serves as regional vice president of sales for Zurich Programs. The program administrator and the carrier collaborate to write a book of business, leveraging the program administrator's specialized expertise in a particular field, class of business, or line of business. The carrier assumes a co-managing role, providing referral underwriting and auditing services, for example. Kenny cited a number of repre­sentative examples of specialized, underserved market niches that can be served well via programs. These include excess and surplus property insurance, workers' compensation for temporary staff, contract litiga­tion insurance, and professional liability insurance for veterinarians.