The current climate is gravitating toward pushingcaptives—including single-parent captives, association captives andagent-owned captives—to appointing experienced, independentdirectors to their boards.

Regulators (including theNational Association of Insurance Commissioners and BermudaMonetary Authority) and ratings organizations (A.M. Best, Standard& Poor's) have come out in favor of the movement toward theappointment of independent directors. They believe independentdirectors add value by providing experienced guidance to captiveowners that is separate and distinct from a captive's otheradvisors, such as managers, lawyers and accountants.

Independents do not have conflicts of interest; they oftenpresent a wealth of experience different from others on thecaptive's board; and they typically possess a broadcaptive-insurance perspective that is rarely matched. When workingwith other directors that have complementary expertise, anindependent director can present a valuable perspective from whichmost captives would benefit.