New cell formations demonstrate that the captive industry and its ecosystem is becoming more accessible to a growing number of companies considering alternative risk financing, says a panel at the Asian Captive Conference. The session, ‘Democratisation of self-insurance’ (to which the conference lends its sub-name), was moderated by Farah Jaafar, CEO of Labuan IBFC Inc. Oliver Schofield, head of captive and alternative risk transfer consulting at Principal Re, identified that the difference in nature and ethos between traditional and cell captives is rooted in the reasons for setting up a captive in the first place. He explained that cell captives are typically formed by smaller companies looking to place one or two lines of coverage and generally lacking a formalised risk management team. Alternatively, companies seeking to establish a full captive tend to have a multi-territory operational platform and a more advanced risk management function. Steven Dewhurst, director at CSLB-Asia, affirmed that the type of captive depends on the business model of the parent company. Within a cell captive, each cell does not have a legal personality separate from the protected cell company, which holds the captive licence, and each cell’s assets and liabilities are ringfenced from that of other cells. Schofield added that an organisation can have both a pure and cell captive, to place the risks of new acquisitions into cells if it does not yet fully understand the long-tail liabilities or requires the loss record to be cleaned before being introduced to the main programme. This ‘democratisation’ of the individual and the corporate empowers not just the insurance buyer in terms of the options available, but the entire ecosystem, stated Graham Clark, chairman and CEO of Asia Affinity Holdings. Clark concluded that financial inclusion must be a core pillar of the business in order to build resilience with communities and improve sustainability.
