At the request of players in the alternative risk-transfer industry, the Captive Insurance Companies Association has begun the process of establishing best practices for captive operations.
Karin Landry, a CICA director and managing partner of Spring Consulting Group in Boston, has been bringing the various facets of the captive industry together to determine best practices.
"We thought it was important that captives, as they continue to grow and develop, benchmark their performance to add value to their organization; to continue to evolve their captive operation; and to separate and compare their performance to the traditional insurance marketplace," Ms. Landry said.
She noted that "getting a dialogue going among global regulators and hearing what they had to say, as well as captive owners and managers, related consultants and lawyers," was a gratifying part of the process. "We brought those two strands together to produce what we will unveil at the CICA meeting," March 5-7 in Scottsdale, Ariz.
Dennis Harwick, CICA president, said that "there is an unmet need to have certain guidelines for operation. This is the route we've started." He said the initial document–which will focus on business alignment, corporate governance and regulatory compliance–would be a starting point "that will grow and evolve as we add new areas and as the industry evolves."
Ms. Landry explained that internationally, there were two different teams creating "a good cross-section of the captive insurance industry."
The process began with the industry group identifying the focus of best practice.
"They got their top-10 list and narrowed it down to three with the regulators' help," she said. "Everybody was able to add their input, so we had participation from Guernsey, Bermuda, Cayman, U.S. onshore domiciles–there were about 35 participants."
This information "puts some stakes in the ground as to what sorts of things you might want to look at if you have a captive, in terms of measuring overall performance versus what people who have been participants in the captive arena would recognize as being best practices," she noted.
Ms. Landry said the project was begun initially because "people started asking for some kind of objective outside measures." She said that "everyone from seasoned captive veterans to folks looking to form captives didn't really have an unbiased view. So it was a collaboration of input."
Working through CICA, "we have a multidisciplinary group of regulators and captive owners," she noted. "I really enjoyed it. I looked forward to every call. Hopefully people will think it's worthwhile."
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