The State of Connecticut Insurance Department is set to partner with accounting firms in the state to expand its presence in the captive insurance market.
The insurance department suggested that accounting firms, as the “trusted advisor” to most mid-sized businesses, are “best positioned to assist in the education and communication of the benefits of captive insurance companies to these businesses”.
As part of the expansion plans, the state has engaged The National Network of Accountants (NNA) and Private Insurance Management (PIM) to assist with the design and implementation of the programme.
The state’s goal is to teach accounting firms the benefits of captives and how to identify clients within their practice areas that would be most likely to benefit from the concept.
The NNA, who has been training and providing educational resources for accounting firms across the US for nearly three decades, will be working closely with the state to ensure that Connecticut accounting firms are well prepared.
Janet Grace, programme director of the State of Connecticut Insurance Department’s captive insurance division, said: “With the serious problems our state and our country are facing right now, we couldn’t think of a better time to educate our business community about risk management tools that are available to them, with which they might not be familiar, such as captives.”
“Businesses in our state that currently have captive insurance companies will have a layer of relief during this crisis that others will not. We want to make certain that all businesses in the state are better educated to all the options available to them to protect against future situations that could create catastrophic losses.”
“We believe that working with our state’s great accounting firms is the best approach to provide this type of outreach and education for Connecticut based businesses,” she added.
According to the insurance department, one of the main issues is that commercial insurance coverage will offer little to no reimbursement to most businesses suffering losses due to the coronavirus pandemic.
Paul Hyl, principal of Private Insurance Management, a captive management company working with the state, said: “Most commercial business interruption insurance policies contain an exclusion for losses sustained as a result of a pandemic.”
“The same goes for loss of key customer or supply chain interruption insurance, which most businesses don’t even maintain because such policies are too expensive in the commercial market. The pandemic exception, or other exceptions, such as the requirement of a physical loss, does not exist in most captive insurance company lines of coverage,” he explained.
“It’s all about education and communication,” said Joseph Tucciarone, founder and chairman of NNA.
Tucciarone added: “If we can get the accounting firms comfortable with the concept, I believe we can have a positive impact on businesses across the state of Connecticut and help them solidify their insurance and risk management planning.”