2013 Captive Insurance Companies Association (CICA) Special Section

CICA 2013 International Conference overview

March meeting will provide a mixture of captive education and networking

The worldwide financial crisis that continues to cause significant problems globally coupled with a hurricane so large in its scope that it has become known as Superstorm Sandy pointed to the fact that the property/casualty insurance market is full of unease and uncertainty as to what 2013 has in store for commercial insurance buyers. One thing is certain, however: Current information has never been more important than today as corporations plot their long-term risk management strategies. For that reason alone, the 2013 Captive Insurance Companies Association (CICA) annual conference is so important.

International perspective

CICA is one of the year's first and largest captive conferences—scheduled for March 10-12, 2013, at the Westin Mission Hills Resort & Spa in Palm Springs, California. The conference takes on more of an international flavor each year, and this year is no different as CICA's incoming board chair, Tomas Wittbjer, is from IKANO, SA in Luxembourg.

Several of the key networking events are scheduled for the first day of the conference. The annual golf tournament is set to begin at 12:30 p.m., while the tennis mixer runs from 2:00 to 5:00 p.m. Both of these events offer attendees an opportunity to meet with peers from the captive community. Additionally, Sunday night has an Opening Reception, which is held in the exhibit area, providing attendees with a chance to chat with some of the industry's best service providers and captive owners in a relaxed atmosphere. Because CICA is a domicile-neutral association, they are free to discuss information regarding any captive domicile, worldwide.

On Monday, following a networking breakfast and brief First Time Attendee Orientation, the educational sessions get into full swing. They begin with the keynote address by Kenneth W. Gronbach, author of the current best seller The Age Curve: How to Profit from the Coming Demographic Storm. He is an internationally respected demographer who develops a wide variety of societal, commercial, economic, cultural and political forecasts with uncanny accuracy. Gronbach's address is titled "Charting the Course through Demographic Change."

An additional insight into the future is being provided in the next session by Thomas Holzheu, chief economist, North America, Swiss Re. Holzheu's topic, "Economic and Insurance Market Outlook for 2013 and Beyond," should be especially valuable to those individuals in the captive insurance business as they develop strategic plans for their captives.

Several years ago, CICA began identifying its educational sessions according to their degree of difficulty. It has followed a similar approach this year by assigning a 101 rating to the beginning sessions, 201 to intermediate sessions and 301 to advanced sessions. Since CICA has established sessions in this way, attendees can quickly identify the difficulty level of each session and tailor their agenda accordingly.

There are several lower, 101 level sessions that may be of interest to those new to captives or prospective captive owners. Among the sessions scheduled is "Captive 101—Back to the Basics with Captive Industry Leaders." This session will provide a good overview with presentations by a captive owner and a consultant, as well as a captive manager. This group of speakers will also provide additional material in "Captives 102—Applying the Principles—Case Study," which will illustrate many of the concepts discussed in the 101 sessions. Because many of the new captive formations have been small to mid-sized companies, another 101 session titled "Successful Strategies for Exploding the Small Captive Market" should be of interest to many attendees. A detailed presentation on 831 (b) captives will be featured in this session.

There are a number of intermediate level sessions that cover a wide range of topics, and some of them are highlighted below. One of the hottest topics in the captive area today is cell captives. For that reason, "Cell Captives: A Dynamic Landscape Continues to Evolve" takes on increased importance as a number of states and offshore domiciles are enacting or updating existing legislation pertaining to cell captives. The speakers will discuss the progress made with these types of captives as well as roadblocks that may hinder their formation and/or growth.

Unrelated business is always a concern to captives that are considering third-party business for their captives. "Does Unrelated Business Need to be Unrelated to Your Business?" will focus on the way captives may be able to gain the advantages of this strategy. Among other things they will look at is the current state of using employee benefits to gain unrelated business.

Other 201 sessions include:

• Investing in Today's Economic Environment

• It's What You Don't Know That will Hurt You – a best practice guide for managing WC claims

• Collateral Issues Roundtable

• New Captive Insurance Tax Issues on the Horizon

• Unusual & Creative Captive Utilization – Case Studies

• Group Captives: When Do They Make Sense?

CICA has also planned a variety of more advanced sessions for the seasoned captive participant. Several in this group are noteworthy, including "The Changing Regulatory Environment," which will discuss a number of issues affecting insurance regulations, in the United States as well as offshore domiciles. One of the key areas of the session is the current tension between state regulations and federal regulations and their impact on captives. Another session will feature principals from Stanford University Medical Center. Stanford, like a number of other organizations, is studying ways they can utilize their captive in developing their value-driven enterprise risk management programs. This case study should be of interest to anyone reviewing the options of using a captive as the focal point of their ERM program.

Other 301 sessions that can offer advanced educational opportunities are:

• Super Losses – The Psychology Behind a Juror's Decision to Award Tens of Millions of Dollars

• Predictive Analytics for Captives – A Case Study

• Captive Governance

• Advanced Tax Update

For many years, CICA was known for its captive fronting survey; however, over the past several years it has greatly expanded the survey to cover far more than just the key components of fronting carriers. As a result, CICA has chosen to rename the survey the "Market Study." In addition to fronting cost, terms, conditions, and carriers, the study provides information on reinsurance and employee benefits. The results of the 2013 study will also be presented at one of the sessions.

The closing reception is scheduled for 5:00 to 6:30 p.m. on March 12. This provides yet one more networking opportunity to interact with others and compare notes. This session has long been a staple for the conference.

Conclusion

There are several other captive conferences throughout the year; however, CICA's conference provides a number of advantages over other events. First and foremost, CICA is a domicile-neutral association and, as such, can provide objective information in a comfortable environment. While the educational sessions are key, as noted from the above highlighted sessions, few other conferences can match their agendas; but they also remain committed to providing ample chances to interact with the other participants. For the past 40 years, CICA has remained true to its roots of providing an opportunity for its members to get together to share thoughts and ideas on how to better operate their captives.

For anyone who is in the captive business or considering starting a captive, the CICA conference offers the ideal solution for educational and networking prospects. The year 2013 promises to be a year of change, and coming this early in the year, CICA can shed some valuable insights into what the remainder of the year and beyond holds for captive owners.