The World of Captives in 2023

The insurance industry has changed significantly over the past two years. Since the start of 2020, how we learn, network, and connect has changed. As the insurance industry now enters a post-pandemic world, face-to-face opportunities have returned, strengthening our knowledge and relationships and ultimately benefiting the captive marketplace.

Our Gallagher Bassett experts regularly attend industry events across the country and enjoy sharing their insights, learnings, and future opportunities within the carrier and captive marketplace. An important topic in the industry right now is the evolution of the captive space. Three of our experts, Amy O’Brien, VP – Captive Practice Sales, Caryn Siebert, VP and Director – Carrier Engagement, and Sarah LaWall, Senior Business Development Manager, recently attended events and are excited to share their insights.

World Captive Forum, Miami, FL, with Amy O’Brien, VP – Captive Practice Sales

The 32nd edition of the World Captive Forum by Business Insurance took place last month, with hundreds of stakeholders from around the world attending to hear from the industry’s top-tier speakers and discuss the leading trends of 2023. Amy O’Brien was in attendance, and views this the kick-off to the captive conference year. This event had record attendance and was extremely social, a reminder that there is no substitution for in-person events in the captive world.

CICA 2023 Conference, Tucson, AZ, with Amy O’Brien, VP Captive Practice Sales, and Caryn Siebert, VP and Director Carrier Engagement

The Captive Insurance Companies Association (CICA) held its 2023 International Conference earlier this month and brought together the best captive professionals from around the world to explore new captive uses, engage new talent, and outline best practices. Two of our experts, Caryn Siebert and Amy O’Brien, were speakers and were in attendance.

Airmic Captives Forum, London, with Sarah LaWall, Senior Business Development Manager

Captives have never been more relevant than in the last three years, as the risk financing revolution has continued to encourage businesses to re-evaluate their risk financing strategies. The Airmic Captives Forum took place this month, focusing on the latest insights from industry experts and providing opportunities for stakeholders to take part in in-depth discussions on the future of insurance. Sarah LaWall was in attendance and shares her learnings from the Airmic Captives Forum.

Since this time last year, what changes have you seen across the captives-focused events?

Amy O’Brien (AO): It’s an exciting time in the captives sector. This year at CICA, there were more than 270 first-time attendees, which illustrates the impressive growth and interest in the sector. Both CICA and WCF bring together stakeholders in all kinds of captives from single parent, to RRGs to group captives. Attendees are looking to create their own capacity or find better ways to finance risk. Not only did we have a huge number of new people, the event had record attendance. I also want to highlight CICA’s Amplify Women and NextGen initiatives for being a big part of what is making CICA a friendly, supportive, and educational association.

Caryn Siebert (CS): The unprecedented events of 2020 were a common theme throughout the conference (given that the 2020 CICA event was canceled), serving as a call to action for existing captive members to focus even more on risk management. Members, and captive managers, are looking to initiate cost savings by improving operations via more efficient and appropriate uses of resources. Additionally, they are interested in having a voice in treating employees and customers with care and through proactively handling claims.

Sarah LaWall (SL): Meeting other attendees who are focused on improving their understanding of captives were the most influential conversations for me. Each captive is unique, which can be daunting during the learning process. The beauty of captives is you have so many options to be creative and invent a bespoke structure, while still incorporating governance and compliance regulations at a local level.

What topics were most discussed by presenters and in your conversations at the events?

AO: It was an honor to be a panelist during the “Ask the Experts” session at CICA. Attendees were interested in a variety of topics, including succession planning in captives and at the regulatory level, when is the right time to form a captive, and how service providers can support captive managers, owners, and members to achieve superior outcomes. Additionally, social inflation was a popular topic across events because of its major impact on the insurance industry. It is taking longer to resolve some categories of claims and they are becoming more expensive due to increased medical expenses, higher jury verdicts, court re-openings, and backlog clearing of older or larger claims. Inflation is also impacting supply chain issues. Something as simple as obtaining car parts or building materials drives up auto and commercial property insurance claims. Terry Self, Director – Carrier Captive Services at GB, took part in a panel discussing six key risk control and claims management resources. That group delineated risk control workshops, professional resources (claims, managed care, nurse triage), captive consultant resources, partners, thorough claim reviews, and risk control assessments.

CS: One of my favorite sessions at CICA was “Capitalize on Your Legacy Liabilities.” Historically, run-off of legacy liabilities was utilized only to close failing captives and risk retention groups. In one of the panels, the audience learned how better managing legacy liabilities can improve their capital resources and influence key financial ratios and drive important strategic goals, leading to a more profitable insurance program. I had several conversations and meetings with participants and experts managing legacy liabilities regarding how to successfully utilize a third-party administrator (TPA), for example, to achieve improved results within their captives.

SL: A key area of interest was centered on how captives pay taxes. Understanding the indirect premium tax responsibility of each country and territory can greatly influence the country or domicile of a captive, especially when looking at Switzerland or the European Union freedom of series, and just like in the US where state laws vary. There was also a great deal of interest in Lloyd’s Captive Syndicate offering. Whether this will take hold in the market as the first point of source for captives—and what additional benefits captives could receive by writing through a syndicate—is yet to be determined.

What are the most pressing concerns for captives, and how can Gallagher Bassett help in their efforts to attract and retain talent?

AO: The importance of accurate data and responding to trending and predictive analytics requests continue to increase. The use of analytics is necessary to identify opportunities to enhance member experiences. Captives that partner with a claims expert like GB can benefit from our benchmarking data, predictive analytics, and decades of industry expertise. In the workers’ compensation line of business, for example, measuring every element of a claim using outcome-based networks, nurse triage, reporting timeframes, and litigation representation is critical for captive members to manage their risks and exposures while promoting a positive financial return. Being passive or complacent is not an option; even the most innocuous claim can get complex and expensive. All captive stakeholders are looking for high-quality customer service in the claims management process and an understanding of what it means to be a captive owner.

CS: Talent shortages in trucking and construction were a leading concern at the CICA 2023 Conference. Captives are concerned because the shortages have caused some entities to bring in newer, less experienced drivers and contractors who might be more likely to get into an accident on the road or a project site, create exposure in faulty construction, or cause completion delays. Those have the potential to create large general liability, construction defects, and auto exposures. Further, as industries like manufacturing, restaurants, and construction look to attract and retain workers, they may deal with staffing issues and younger, less experienced workers—both of which can lead to an uptick in injuries and workers’ compensation claims.

Keeping up to date with regulations was another focus area across events. Why should captives consider partnering with a claims expert to combat the increasing complexity of regulations in the captive marketplace?

AO: Captives must stay on top of regulations and legislation in each domicile. The insurance industry is dynamic and constantly evolving. New laws are being introduced regularly, so staying up to date is becoming increasingly difficult. Partnering with a claims expert can help alleviate this pressure for captives so that they can focus on other areas of their business.

SL: Reporting was noted as a pain point for captive shareholders. One attendee shared that their captive requests up to 15 reports per month for financial and compliance issues. Having an award-winning, innovative reporting platform, like Luminos, can allow captive clients to access customized automatic reports in real-time and mitigate human error.

From our team’s perspective, outsourcing provides several benefits, including having comprehensive oversight of regulation changes by specialized experts to stay competitive in an evolving insurance marketplace, adding robust risk management frameworks to capabilities, and enhancing brand reputation. Staying up to date with legislation is a constant challenge in today’s marketplace. Still, with the right strategic partnerships in place, captives can focus on other business areas while knowing they remain compliant with regulations.

Connect with our team to find out how we can tailor our support to the needs of our clients.

Joe Berrios

Joseph Berrios

Managing Director, Carrier Practice

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