Regulators need to take responsibility when licensing captives, according to Sandy Biggleston, director of captive insurance at the Vermont Department of Financial Regulation.
Speaking on the regulator concerns panel at the World Captive Forum 2019, Biggleston said that the business of captive insurance should “aligned with insurance”.
She explained: “It should be a tool for risk management and risk financing, done in a private setting under a captive insurance company.”
“As captive insurance regulators we need to take responsibility for what we have created.”
“We need to take accountability for what we have created and we cannot license a captive insurance company for any purpose other than insurance.”
Biggleston suggested that regulators then had the responsibility to monitor companies moving forward.
There was some heated discussion over the role of the National Association of Insurance Commissioners (NAIC) in the session, but Bigglestone said the industry had been “very fortunate” to have the NAIC as a ruling body.
She added: “It was originally created for commercial insurance companies operating in the US and those standards can be a basis for regulating captives. We do not need to follow every step of the laws.”
“It can be a basis for our regulation and setting standards for captive insurance. It has served us well for other types of entities, such a risk retention groups.”
