Captive Interest High At RIMS
By Caroline McDonald
NU Online News Service, April 22, 10:26 a.m. EST, New Orleans?Exhibitors representing captive domiciles at the Risk and Insurance Management Society's annual conference reported business was brisk, thanks to rapidly hardening prices for property, workers' comp and other commercial insurance lines.
Len Crouse, director of captive insurance for the Vermont Department of Banking and Securities, said here last week that at least 30 meeting attendees stopped by the Vermont booth to discuss establishing a captive. Of those, "as many as 20″ could end up forming captives, he said.
"A lot of people are coming in after attending captive sessions. The interest is really high," thanks in large part to the hard market, Mr. Crouse said.
At a fully-attended RIMS session on captive basics, Mr. Crouse said that one-third reported having captives and two-thirds didn't. Of those that didn't, he said, most raised their hands when asked if they were interested in forming a captive.
"You know what's amazing?" he continued. "When I look around here, I see some of the largest insurance companies in the world" now including captive management in the services they offer. As for intermediaries, he said, "even 12 years ago you didn't have brokers talking captives. If a customer 12 years ago asked a broker about a captive they'd tell them. But now it's an arm of their business."
Mr. Crouse concluded that his state "could very well do 50 captives this year; something I thought I would never say."
Mr. Crouse said the reason given for wanting to form a captive is mostly terrorism-related, high-cost commercial property coverage. "But along with property, everything else went up, too," he added, "but not as drastically. So they'll bring in their property but they'll also bring in their [workers'] comp, their general liability, their traditional lines."
How long the insurance market will remain hard is anybody's guess, he said. Although insurance cycles were previously seven years, "whether or not this market will stay hard for that long, I don't know. Most people are saying the capacity is out there, so somebody is going to start lowering their prices. And when someone does it, they're all going to do it, so we could be back to a softer market before we know it," he said.
Kevin Doherty, president of the Georgia Captive Association, which exhibited at the RIMS conference for the second year, noted that Georgia could license as many as four captives as a result of inquiries at their exhibit booth. Interested organizations, he said, were either located in Georgia, or had "some interest in Georgia."
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