From: Captive International

‘Silent’ evidence is information we don’t have access to due to the type of data being collected or our own inability to recognise that it exists, and it needs to be taken into account when considering risk placement for a captive, says Enoch Starnes of SIGMA Actuarial Consulting Group.

As the captive insurance landscape continues to expand and mature, the types of risks that are placed into captives will grow alongside it. Even now, the risks included in captives represent a wide array of exposures and business needs. Some of these are more “traditional” in nature and have historical data that is easily capturable.

Others, however, are emerging or have limited amounts of information. Placing the latter type of risk into a captive requires both analytical support and qualitative detail, especially when the scenarios which produce a claim for these risks are infrequent, but potentially severe.

One item that may be necessary when considering risk placement for a captive is an understanding of “silent” evidence. We at SIGMA have written about this phenomenon in the past, but we think it is an increasingly important piece of long-term captive management.