From: Captive.com/IRMI
While the COVID-19 pandemic has hit various businesses and industries differently, captive insurance companies have generally performed well, with many having large amounts of surplus able to help their parent companies deal with difficult financial times.
“It really has affected everybody a little differently,” said David F. Provost, deputy commissioner of Vermont’s Captive Insurance Division. “We had captives that built up a large amount of surplus,” Mr. Provost said, adding that it was heartening to see those who had a large amount of surplus be able to use those funds to help their parents or members.
Where there is coverage, where there is no exclusion, insurers have largely refused to pay business interruption losses, citing a need for physical damage to the property”
Dave Tatlock, Strategic Risk Solutions
Mr. Provost offered his views on the pandemic’s impact on captives and other captive insurance issues as part of a “Hot Topics” session at the Vermont Captive Insurance Association (VCIA) recent 2020 Virtual Conference.
Mr. Provost said that as soon as the pandemic began, Vermont’s captive division began seeing numerous captive insurance companies filing business plan changes.
Going forward, many captives will probably review policy language to be certain of coverage and plan for future events, the Vermont regulator said. “Many will probably look to what their colleagues did with their captives for ideas of what they might do,” he said.
“Through our solvency monitoring processes, we do expect to see certain results across the board,” said another panelist, Sandra A. Bigglestone, director of captive insurance in the Vermont Department of Financial Regulation.
Ms. Bigglestone said the captive division expects the pandemic to be reflected in investment portfolio declines, decreases in premium, and perhaps decreases in captive insurance activity. The division elected to proactively reach out to certain companies based on their 2019 results to ask about their plans under the current economic conditions, Ms. Bigglestone said.