Dan Towle, president of CICA, provides an update on how this year has been for the association and, in a market full of challenges, calls for the industry to keep the momentum going
How strong do you think the captive market is currently?How strong do you think the captive market is currently?
The reports I hear from the domiciles are that formation activity continues to be solid. This has been consistent for some time considering the overall market has been quite soft. I believe this speaks volumes about the validity of captives being formed for long term-risk management benefits, not short-term benefits driven by a hard market. Formation activity is a good indicator of overall strength of the captive marketplace. With that said, there are always threats to our industry.
Some segments of the captive population are more vulnerable than others. The small captive space is an area that is under scrutiny by the Internal Revenue Service (IRS) and continues to find itself on the IRS’ Dirty Dozen list.
The Captive Insurance Companies Association (CICA) has published guidance for small captives and will continue to do so. Unfortunately, as an industry we are often guilty by association, so when the small captive space gets negative publicity, it hurts the entire captive industry.
How has 2018 been for CICA?
For me personally, it marks my first full year as CICA’s president. It’s nice to be at a place now where I’m not always doing something for the first time. For CICA it’s been a busy year on several fronts. We’ve spent a lot of time in conversations on advocacy issues, including the Microsoft case, and other cases.
We continue to deliver on our commitment to developing the next generation of captive professionals. CICA has launched several new initiatives that include making CICA membership benefits available to more industry professionals, and we have expanded our programmes to engage risk management and insurance students with an essay contest. It has been really energising to see the enthusiastic response to these new programmes.
What does CICA have planned for the final months of the year and the start of 2019?
We are hard at work on planning for the CICA 2019 International Conference. The programme committee has put together a robust slate of educational sessions from the proposals we received. I am very proud of the group of volunteers we have.
They spend a significant amount of their time ensuring we put forth the very best educational slate for our participants. This conference looks to be even bigger than 2018. Look out for registration opening in mid-November.
Our newly invigorated membership committee has been meeting. We are focusing on growing our membership among captive owners. This dovetails with our commitment to developing the next generation of captive professionals.
We need to make sure the next generation, especially those people who might currently be in secondary positions, can connect with the education and career advancement opportunities to help them prepare to step into a primary role with their captive.
As always, as a domicile neutral organisation, CICA is often looked to for facilitation or commentary on a range of issues that have the potential to affect the captive marketplace. We plan to continue to actively monitor and prepare to address challenges as they arise.
What do you see as the key differences between the US and European captive markets?
We share some of the same struggles regarding helping our different regulatory bodies understand us and realise the validity of captive insurance arrangements, but there is definitely a difference in market maturity. The US captive market is much more mature than the European captive market. The US has more infrastructure and more industry promotion to help drive growth. In Europe, they have to spend more time validating the captive concept to a broader market. The cost of operating a captive in Europe, due to regulatory hurdles, makes it difficult for smaller and mid-sized companies to form captives. As a result, much of the European captive marketplace is made up of Europe’s largest companies.
What is CICA’s stance on the Microsoft case and the potential for similar actions?
This summer I talked with captive and risk management professionals around the US who, like CICA, are watching the impact of the Microsoft and the Washington State Office of the Insurance Commissioner decision. Microsoft decided to settle, but the legal arguments they put forward in their publicly available court documents were strong for why this tax should not have been applied to them. We are still hopeful that this is an isolated case and that Washington State does not try to apply this more broadly. We will continue to watch this situation closely and will be in contact with our members in Washington State.
A hot topic at the moment is the industry talent gap, how has CICA been working to help change that?
CICA has made a commitment to lead the charge of addressing the captive industry talent gap. We have enhanced our member benefits with a mentorship programme and expanded our partnerships with educational institutions. Our newest initiative with the International Center for Captive Insurance Education (ICCIE) offers professionals who earn their Associate in Captive Insurance (ACI) a complimentary one-year membership with CICA. This gives them access to our membership benefits, including our mentorship programme, which can be a key component to career advancement.
What do you think the industry needs to do to help solve it?
Keep the momentum going. Continue to listen to all sectors so that we can understand what students, young professionals, and today’s leaders are looking for so we can continue to develop new programmes. These programmes will help promote the dynamic nature of captive insurance and support career advancement within the industry.
We all have a role in this. So many of us never planned a career in insurance, but we quickly learned how rewarding and challenging this industry can be.
We all need to share that story. It begins with speaking not only to college students, but to high school students as well.
I have had so many terrific conversations with people from all across the industry about what CICA is doing, including with organisations that want to develop their own initiatives. I would also like to thank organisations like Strategic Risk Solutions for their support of our essay contest and to encourage organisations to continue to support these vital programmes.
I applaud our association partners who have also stepped up to launch student outreach initiatives and I encourage all of us to take a more active role.
CICA has a close working relationship with ECIROA, what have you worked on with them this year/what have you got planned?
The European Captive Insurance and Reinsurance Owners’ Association (ECIROA) is a valued industry partner and has been for many years.
Earlier this year we recognised ECIROA for their work to protect the captive insurance community in Solvency II discussions, for providing comments to the Organisation for Economic Cooperation and Development (OECD) and many more issues vital to our industry.
This summer CICA collaborated with ECIROA regarding the OECD 3 July discussion draft on proposed transfer pricing rules for intra group financial transactions. CICA and ECIROA both submitted comments. This joint effort was important and symbolic of our continued strong partnership.
We worked with ECIROA as co-organisers of the biennial European Captive Forum. CICA and our members presented several sessions such as “Captives 101—Why and How to Establish a Captive,” “US Regulator Panel: The US/EU Relationship and Captive Supervision,” “International Hot Topics—A View from the US” and “US Workers Compensation—Do You Understand It?”
We look forward to continued collaboration with international industry leaders to foster industry growth, now and in the future.
