Captive Insurance Companies Association Special Section
CICA leadership moves toward the future
Continued networking and monitoring of regulation will be priorities
By Michael J. Moody, MBA, ARM
The Captive Insurance Companies Association's (CICA) annual
conference, which is scheduled for March 11-13, 2012, typically marks the
advancement of the new leadership that is headed by the board chairman. This
year the board chair is Dirk Heim, vice president of Sierra Land Group. Like
several of the last chairpersons, Heim is a captive owner who is committed to
advancing CICA's mission. By his own admission, "I'm not normally a joiner, but
CICA provided so much assistance to me over the years, I wanted to give back
Sierra has been involved with captives for quite some time. Heim
points out that the company "formed its captive in the Caymans in 1982." While
Sierra currently is primarily involved with building and operating hotels, he
says, "In 1982 their primary business was hospitals and nursing homes." And he
notes that this was a class of business that has suffered in the insurance
marketplace. But, he points out, while the scope of their business has changed,
Sierra's commitment to the captive has not.
Not only does Heim get involved with all of the insurance-related
matters for Sierra, he also is responsible for claims management and
safety-related issues as well. Included within this broad scope of
responsibility is the operation of the captive. For a variety of reasons,
Sierra has chosen to maintain the Caymans as its domicile for the captive
operations. Today, Heim points out, the captive is used primarily as a funding
vehicle for the deductibles on various programs. "We have a good risk
management team and good control over our claims, so as a company we take a
pretty high deductible."
And, he adds, "Where it makes sense, we have a pretty fair amount
of risk and we transfer this to the captive." Regardless of the business or the
state of the insurance market, he says, "the captive has played a significant
role in our risk-financing program."
Heim has been a member of CICA for about five years. He notes
that it was the ability to be able to talk to other captive owners that
initially drew him to CICA. And while the sessions at the meetings are always
excellent, it still is the networking opportunities that he enjoys the most.
"That is still my favorite part of the conference, meeting other captive owners
and learning what they are doing." As a result, he is a strong supporter of the
conference session that is restricted to captive owners, where they can discuss
topics of mutual interest.
However, the networking goes beyond meeting other captive owners.
It also applies to vendors, regulators and other interested parties. Heim notes
that it is always good, for example, to chat with exhibitors. He believes that
an owner or prospective owner can gain significant insight into the captive
movement by talking with exhibitors. And, he says, there is always the
possibility of utilizing the services of some of the vendors. In his case, they
tried to accomplish a task involving the captive with their normal service
provider; however, it became quite complex and difficult to do. "Our
traditional service provider had to get their legal departments, and then
additional fees soon began to mount," he says. Bottom line, "They were trying
to reinvent the wheel."
At this point, Heim says, they decided to use a service provider
that he had met at a previous conference. This was a service provider who had
"specific captive experience." What a difference. "They were so much easier to
work with, and they knew exactly what we needed." He says this was a good
lesson for him, since now he makes certain that they always try to secure the
services of vendors who have captive experience.
2012 and beyond
CICA's leadership is aware of the changing captive environment
that new, worldwide financial regulations will place on its members. While some
of these regulations were introduced prior to the financial crisis, most are a
direct result of the failing of the financial industry. Heim points out that
while CICA has always been active as an advocate for the captive industry,
today, "there is a lot more going on, and captive owners typically have limited
resources available to them." Additionally, even state captive associations may
have difficulty maintaining a global view of these regulations. "Thus, it is
important for CICA to continue to find ways to maintain or even strengthen its
advocacy role." A top priority for 2012 will be to develop a strategy for CICA
to continue to update its members on these important areas of concern.
In addition to more specific advocacy efforts, the annual
conference will provide educational sessions aimed at the increasing regulatory
landscape. Those include sessions that deal with U.S. legislative issues such
as Dodd-Frank, and subsequent amendments such as the Nonadmitted and
Reinsurance Reform Act of 2010, as well as international regulations such as
Solvency II. Additionally, there are several sessions that deal with potential
tax issues that may arise for captive owners.
Heim also notes that there are general sessions where both
captive owners as well as service providers can discuss issues of interest.
These would include such issues as health insurance opportunities for captives
and middle market captives. "We believe that we have put together a conference
that will attract participants at all levels of experience," Heim states.
Thanks in large part to the global impact of captives, one of the
major issues that occurred during the last half of 2009 is that CICA has
established a formal working relationship with the European Captive Insurer and
Reinsurer Owners Association (ECIROA). Heim indicates that it is important for
CICA to become more international in its focus as more international
corporations become involved in the captive movement. He states that CICA is
trying "to provide a platform for the captive industry to move forward."
Among other things, this should provide closer monitoring of
international regulatory bodies that can have an effect on captives regardless
of whether they are state, federal, or even at a county level. Heim adds that
this is why it is important to maintain CICA's advocacy role. "Insurance
regulations have become international in their scope, and thus it is important
that our involvement with ECIROA continues to grow in this important area."
Based on Heim's past performance, one would expect to see more
activities to help captive owners that can be provided via peer-to-peer
exchange of ideas. He has long advocated a direction that constantly adds value
to CICA's membership such as the various networking opportunities. He notes,
"The diversity of the membership and the fact that they all have something to
contribute" makes a CICA membership that much more valuable.
Frequently a trade association, via its leadership for a given
year, takes on the agenda of the chairperson. It appears that this will also be
the case as Heim takes over the reins of CICA for 2012. He will remain
committed to providing ample opportunity for networking at conferences, not
only networking among peers, but also among captive owners and service
providers. Additionally, he believes developing a more aggressive advocacy
position for the organization will provide CICA with a solid foundation for assisting
its members going forward.