Delegates gathered in St Louis, Missouri, for the 8th annual Western Region Captive Insurance Conference, which brought together industry leaders to help develop a ‘culture of innovation’
Delegates gathered in St Louis, Missouri, for the 8th annual Western Region Captive Insurance Conference, which brought together industry leaders to help develop a ‘culture of innovation’
St Louis, Missouri, played host to the 8th annual Western Region Captive Insurance Conference (WRCIC) as delegates from across the US gathered in the Gateway City to “Play Ball!” at the event hosted by the Arizona, Utah, and Missouri captive associations.
The conference may have been down in numbers slightly from the previous year, but that made it a closer, more personal affair. To borrow the conference’s baseball theme, it felt like you had more time at bat with other industry professionals.
According to conference chair Mike Grubbs, this increased “facetime” was a big positive for delegates. He explained: “Attendees advised they were able to get a lot of productive meetings aside from the conference presentation.”
Alan Fine, partner at Brown Smith Wallace and member of the organising committee, added: “Like any conference it’s not just about the education.”
“Rather, it is about the ability to make new connections, visit with friends and colleagues, and have more meaningful discussions and exchange of ideas that is facilitated by being face-to-face with others in the industry.”
He continued: “Participating in the sessions and looking around the room, the words of one of our speakers absolutely rings true—the participants in this conference are amongst the leaders in this industry.”
Building a culture
Leadership was the key theme that keynote speaker Jimmie Blackmon, one of the most combat experienced leaders of the modern era, spoke at length about. Blackmon stressed the importance of building a ‘culture of innovation’ in which everyone was empowered and challenges could be approached and solved in the most effective manner.
He repeated the same questions that he posed to himself before heading to Afghanistan, ‘do we have the agility or flexibility we need?’ and ‘are our strategies optimised today?’, suggesting that these could be applicable to captive insurance leaders.
Building this culture of innovation was a theme echoed in the conference schedule, which approached a number of challenges faced by the industry.
Covering the bases
Arthur Koritzinsky, managing director of Marsh’s captive solutions group, said captives could be the only way of gaining cost-effective terrorism insurance that covers nuclear, biological, chemical and radioactive impacts (NBCR).
Speaking during a session covering terrorism insurance at the conference, Koritzinksy said: “Using a captive to write NBCR may be the only affordable way of getting it.”
Fellow panellist, and the Missouri Department of Insurance’s captive programme manager, John Talley added: “Some commercial insurance companies are not offering NBCR coverage in their terrorism package.”
“What does a company do in that circumstance? Well if they have a captive, they can use that. Captives can provide NBCR because Terrorism Risk Insurance Act (TRIA) and the Terrorism Risk Insurance Program Reauthorisation Act (TRIPRA) authorise federal backstop reinsurance.”
According to TRIPRA, as long as NBCR is covered in the underlying policy it will be covered by TRIA.
TRIPRA ends in 2020, but it is thought that it will be quickly reauthorised at that time, similar to the reauthorisation in 2015.
Questions still remain over whether there would be any alterations to the Act in that event, but it is thought to be unlikely we would see any clarifications in the way ‘terrorism’ is defined in the act.
It is suspected that the trigger, the minimum amount of damage required to result in compensation for insurance companies, would continue to increase (it is currently at $160 million and is increasing $20 million annually).
Creative tactics
The ‘culture of innovation’ that Blackmon described in his keynote speech was reiterated by Bob Davidson, managing director of captive consulting and underwriting at ICG Captive Services, who said captives need to be creative to help clients solve their problems.
Speaking in the ‘Brightest Opportunities in the Captive Industry Version 2’ session, Davidson said being creative was vital to success in the captive industry.
He explained: “In order to be a winner in the captive marketplace we’re going to have to think more creative, we’re going to have to be more competitive with ourselves.”
“We have to be creative, as we go out and sit down with clients we have to help them solve their problems.”
“It is not about me selling you a captive, it is about me helping you understand how a captive can help solve your problems, how it can benefit your bottom line, how it can make a difference in your operations.”
“In order to be a winner in the captive marketplace we’re going to have to think more creative, be more competitive with ourselves, and solve problems. There is no better time than today to be in the captive industry.”
Davidson added: “What we have to do as professionals, as the vanguards of this industry is differentiate. We want to change the playing field to our advantage.”
The panel also featured vice president of Pro Group Captive Management Services, Renea Louie, and Nicola Neilon, shareholder and CPA at Casey Neilson.
Louie said educating yourself and your clients was important in helping a captive to thrive.
She stated: “In order to succeed in today’s ballgame, we must get smart, educate ourselves and our clients. You have to know your playing field.”
“Companies are getting so much chatter from so many places, a lot of conflicting information, but we need to make sure we are giving them correct and accurate information.”
“We are resilient, we are thought leaders. Business is moving forward, business owners need us.”
She added: “We can empower our client to take ownership of their destiny.”
Stiff competition
The final session of the conference brought insurance department leadership from five of the states in the Western Region, Utah, Missouri, Arizona, Montana and Kentucky, together for the ‘Regulator Round-Up’.
One of the themes discussed was the growing number of US states with captive legislation, Utah director of captive insurance Travis Wegkamp said domiciles will have to learn to deal with the increased competition brought by this increase.
Wegkamp said the rise in competition would have both advantages and disadvantages.
He explained: “Competition can help each state become the best domicile it can be but there is also the threat that that competition could go too far with states cutting corners or relaxing their legislation too much, which may allow captives to go too far and show the captive industry in a negative light.”
“I think that is an important line to learn to walk.”
Another panellist, Oklahoma director of insurance James Mills, said an increased number of US states with captive legislation could bring industry-wide benefits.
He said: “As we add states to the list of domiciles, we add a lot of credibility to the captive industry.”
“That credibility expands into the exposure that we get, which may see us move into new areas. Rather than cutting up the same piece of the pie, we are going to give them another pie to add to the table and expand this in everybody’s interest.”
“We think this is something that will benefit the nation as a whole.”
Mills said learning from other domiciles had helped Oklahoma shape their captive law and would be a key to the new domiciles’ success.
“The domiciles which take the captive industry seriously will take on those best ideas of their peers, which will mean we grow together and become a better captive industry together.”
He added: “On the whole, I think we are going to see a lot of development from the states picking things up.”
An expanded roster?
Fine said he considered the conference “an incredible success”, despite the slightly reduced numbers. He explained: “This conference not only showcased our region’s captive insurance market and the excellence that resides within it but also that of our sister domiciles. I’m really looking forward to next year!”
Next year’s conference, which will take place 20 to 22 May 2019 in Scottsdale, Arizona, may have a slightly different look to it as there were murmurings that the WRCIC may grow, with more associations from domiciles in the region, such as Kansas, Montana or Nevada, joining as hosts.
Fine commented: “We would be honored to have any or all of these domiciles and the members of their associations join us. Any time one has the ability to exchange ideas with a broader segment of the industry, it can’t help but lead to a positive experience.”
“I believe that the participants in the WRCIC would benefit from having any or all of these domiciles join us at our conference, whether on a one-time basis or as members of our Association.”
He concluded: “We would welcome the opportunity to engage in discussions as to how we could potentially make this happen.”
