New resource addresses misperceptions and outlines commonly accepted practices for risk pools 

MINNEAPOLIS ─ January 31, 2019 ─ The Captive Insurance Companies Association (CICA) today released a new guidance document, “Commercial Insurance and Captive Insurance Industry: Commonly Accepted Practices.” The document provides a review of the structure and use of risk pools, addresses some of the common misperceptions, and provides guidance on commonly accepted insurance practices.

“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,” CICA President Dan Towle said.

“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,” Towle said.

Towle commended 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 organizations that provide a wide array of captive management, legal and actuarial services,” Towle said.

CICA has a long history of providing best practices and guidance for the industry about how to form and operate a captive insurance company. In July of 2018, CICA updated its 2015 “Information Statement Regarding Small Captives.” This newest guidance document, released today, continues CICA’s expansion of our Captive Best Practices resources.