From: Captive International
The captive insurance landscape is evolving, presenting both challenges and opportunities for businesses looking to establish and optimise their captive programmes.
That was one of the key messages from a panel debate, which took place at the annual CICA conference, taking place this week in Tucson, Arizona. Moderated by Courtney Claflin, director, CICA, the experts looked at key considerations in fronting carrier selection, reinsurance agreements, and negotiation strategies.
Jennifer Guidry-Burnham, vice president of marketing and business development at Great American Insurance Group, emphasised that when investigating a fronting carrier, it is crucial to assess various elements from both the insurer and captive perspectives.
“The financial strength of the carrier is key,” she stated. “You want a partner who can support the captive and align with the right reinsurance partners. Understanding the carrier’s comfort with the structure of the captive and their ability to support it is equally important.”
Guidry-Burnham also highlighted the importance of product offerings and subject-matter expertise within a fronting carrier. “Not all carriers have the same level of bandwidth or expertise in supporting various products. Claims and service capabilities, third-party administrator (TPA) relationships, and brand reputation should all be taken into account.”
Steve Bauman, global programs & captives director at AXA XL, reinforced the significance of a comprehensive business plan when structuring a captive. “Reinsurance capabilities should be considered from the outset. A fronting carrier should not just be a short-term solution but a long-term partner that can grow with your captive,” he advised.
Bauman noted that fronting should not solely be viewed as a legal necessity. “Strategically, having a fronting company in place can offer brand protection, particularly when dealing with sensitive claims. Captives adjudicating claims directly with their customers can create complications. Having a fronting partner provides an added layer of insulation.”
