Captive board members are in place to support the business, and if the board doesn’t like the strategic direction of management then they should be looking at changing management as opposed to getting involved and changing the strategy, according to Stephen Crim, a partner at C&S Specialty Underwriters.
During a panel discussion at the Vermont Captive Insurance Association conference, Crim suggested that as a captive matures it is important to have professional managers on board, whether that is a captive manager or a programme manager.
Crim said: “You have to let the management team run with that, and the board’s role then becomes more of a supervisory role [of] oversight. Let the management team set the strategy and the board should be asking probing questions and challenging management all the time.”
Another panellist, Judy Ertel, president of Dynamo Insurance Group, explained that board members are there to support the business and, in her experience, board members support the strategy of solving problems for the business.
Ertel said: “I think as a captive manager team and risk insurance team, we do a good job of formulising the process by which the business comes to us to ask or request customisable kinds of coverages.”
She added: “The board’s role in all of that is we have to find an official process where the management team can demonstrate clearly and transparently that the business has the exposure, the data is there, the analysis has been done and the decisions have been made, so that the board has the ability at a high level to see the due diligence process has worked.”
Tyrone Garrett, director of HAI Group noted that the situation is different at his organisation because, other than the two independent directors on the board, everyone is an executive director of a housing authority, which means their input to the organisation itself keeps it efficient.
He suggested that the situation is unique for different types of business and, because at HAI Group there are directors at that level, “we have a strong influence on what we can use on a daily basis at our agencies”.
