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Who's watching out for you

Role of Captive Manager

Very few organizations have the internal resources or expertise to design, form, and operate a captive insurance company.  Therefore, the most important decisions for a captive owner are 1) choosing your captive's manager and 2) choosing your captive domicile.

What Does a Captive Manager Do?

The key responsibilities of a captive manager involve:

  • Providing insurance, risk management, and underwriting expertise to the captive;
  • Developing and evaluating business plans and providing pro forma financial statements;
  • Producing and shepherding the captive's licensing application with regulatory agencies;
  • Developing equitable premium allocations among the captive's insureds;
  • Issuing and monitoring policies and premium invoices;
  • Providing certificates of insurance for captive coverages;
  • Monitoring and reconciling bank and investment records;
  • Maintaining the captive's financial and operational records;
  • Coordinating the services of the captive's service providers including the actuary, auditor, tax preparer, claims administrator, attorney, investment advisor, fronting carrier and broker (if applicable);
  • Being the primary captive contact for regulatory agencies and assisting in regulatory compliance;
  • Producing quarterly and annual financial reports for the captive's board of directors;
  • Filing insurance regulatory reports as needed;
  • Completing and filing premium tax returns;
  • Monitoring claims and assistance in setting reserves; and
  • Monitoring the captive's reinsurance programs.

 

 

What are Important Considerations When Selecting a Captive Manager?

The above list gives you clues about expertise your captive manager should have.  Here's a summary of what clients tell us is important to them in working with Captive Managers:

  • Understands my industry and the issues we face;
  • Has extensive experience and expertise with captive arrangements, insurance, finance, accounting, and laws affecting captives;
  • Is responsive and communicates clearly and frequently;
  • Is proactive in identifying our needs and offering solutions;
  • Keeps us apprised of new developments that may affect our company;
  • Works well with people in our company and with our selected service providers;
  • Lives up to its commitments;
  • Has a high ethical standard and avoids potential conflicts of interest;
  • Provides real value to our captive and our company; and
  • Is reasonably compensated.

What about Conflicts of Interest?

A conflict of interest is a situation in which someone in a position of trust, such as an insurance agent/broker, captive manager or an executive or director of a captive, has competing professional and/or personal interests. Such competing interests can make it difficult to fulfill his or her duties fairly. Even if there is no evidence of improper actions, a conflict of interest can create an appearance of impropriety that can undermine confidence in the ability of that person to act properly.

Let's examine the potential conflicts of interest when an insurance agent or broker consults with a client regarding the formation and operation of a captive insurance company.  Will the broker encourage the client to evaluate whether the broker's services will be needed (and commissions paid) for captive insurance policies? Does the broker have affiliated captive management firms or referral fee arrangements which encourage the client to be steered? Will the broker be able to provide an unbiased comparison of captive domiciles, captive operating costs, advantages, and disadvantages?  Will the broker or captive manager also earn fees or commissions on captive reinsurance transactions and how does the broker ensure that the captive receives the most competitive program?  Will the broker steer the client to its own actuaries, claims adjusters, captive managers, or affiliated reinsurance brokers?  These are just a few of the potential conflicts of interest when a broker or insurance company consults with a client on captive feasibility.  The potential conflicts of interest are compounded when the client is steered towards broker-owned or insurance company owned sponsored captives, rent-a-captives, and protected cell captives.

What Makes Total Captive Solutions Unique?

  • We get the job done.  Total Captive Solutions is proactive, responsive, accountable, and offers solutions... not problems.
  • Total Captive Solutions does not have the above mentioned conflicts of interest and so clients are assured that our advice is in their best interest.  Total Captive Solutions is independently owned and operated: it is not owned by an insurance or reinsurance agent, broker, insurance company,  investment firm, or attorney firm.  Total Captive Solutions is paid strictly on a fee basis by its clients and does not pay or accept referral fees or commissions from third parties.
  • Total Captive Solutions has 20 years of captive industry experience and expertise in medical malpractice.
  • Total Captive Solutions uses technology to our clients' benefit, speeding communications and decision-making.
  • Total Captive Solutions focuses on advocating for a regulatory environment that benefits our captive clients. 
  • Total Captive Solutions staff's credentials include degrees in risk management, finance, accounting, and law. 
  • Total Captive Solutions has consulted with clients in practically every industry regarding alternative risk financing programs, so we have a good up-front understanding of issues and needs.
  • Total Captive Solutions works with the service providers that our clients have selected so that the client has total control over who is involved in their captive program and total control over its investments.
  • Total Captive Solutions maintains strict confidentiality of our clients' programs.
  • Total Captive Solutions has never lost a client to a competitor because we have earned our customers' loyalty and trust.

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