Hardening a captive is integral to surviving audits and thriving under increasing regulatory scrutiny, according to speakers at the Captives & Corporate Insurance Strategies Summit in Toronto, Canada.
The panel said that the key to doing this successfully is understanding a captive's primary exposures, bringing in the correct experts such as actuaries and accountants to help, and managing reputational risk.
One speaker claimed that financial modelling is a useful tool to "justify the use of a captive to CFOs" and influence how a captive's board makes decisions.
Self-auditing was a recurring theme throughout the conference, with one speaker pointing out that the phenomenon would soon become best practice in the industry, and a useful way to harden a captive against audit.
Other important techniques pointed out by the speakers included having "contemporaneous documentation" and managing reputational risk through the use of transparency.
Cooperation with ratings agencies is essential for this, according to one speaker, who went on to state that they would not even consider working with an unrated entity.
