The Captive Insurance Companies Association (CICA) has released a new guidance reviewing the structure and use of risk pools.
The guidance document, titled ‘Commercial Insurance and Captive Insurance Industry: Commonly Accepted Practices’ aims to address some of the common misperceptions and provide guidance on commonly accepted insurance practices.
CICA President Dan Towle commented: “CICA has always been a leader in championing the use of best practices for operating captive insurance companies, and we’re pleased to expand our best practice resources with this new guidance document.”
Towle added: “Risk pools are an important element in both commercial and captive insurance, but unfortunately their use is often misunderstood.”
“As a result, recent high-profile cases such as Avrahami v Commissioner and Reserve Mechanical v Commissioner paint activities like risk pooling with a negative brush that spills into the commercial and captive insurance industries.”
“We feel it’s important for a domicile-neutral organization like CICA to help explain the commonly accepted practices for creating and operating a risk pool.”
He praised CICA’s Small Captives Task Force members and other CICA members for their work on the guidance document: “CICA has a wealth of knowledge among our members, many of whom are leading captive owners and organisations that provide a wide array of captive management, legal and actuarial services.”