AM BestTV at VCIA: Regulators Say Overseeing Captives Requires a Different Perspective

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- In this ^AMBestTV episode from the Vermont Captive Insurance Conference (VCIA) in Burlington, VT, captive regulators Dave Provost of Vermont and Debbie Walker of North Carolina said regulators take a closer look at captives’ business issues because captive sponsors are typically sophisticated organizations that voluntarily commit their capital. Click on http://www.ambest.com/v.asp?v=regulators819 to view the entire program.

Provost, the deputy commissioner of the Captive Insurance Division of the Vermont Department of Financial Regulation, and Walker, director of captive insurance in the North Carolina Department of Insurance, said a top issue for them is the education of captive owners and captive insureds, as well as how the captive insurance company needs to be operated. Walker added that this especially holds true for her, as North Carolina is a newer captive domicile.

“Most business owners understand that there’s laws in place that they must comply with,” said Walker. “There’s a few that don’t fully understand that though, and perhaps may decide to take out a dividend or take a loan from the captive insurance company and use it for other purposes, which may be fine, but they do need to get the approval of the department first.”

“For a lot of the captive owners, this is their first experience being a regulated entity,” said Provost. “If you’re a construction company, you have rules to follow with zoning rules and things like that, but not rules about what you can do with your own money.”

Provost also said larger group captives can be more challenging to regulate compared with single-parent or smaller group captives.

“A group captive is much more like a traditional insurance company, a commercial insurance company, especially the largest groups where the membership might not really be involved in operating the insurance company,” said Provost. “If you don't have that involvement, a group can function less cohesively, which can wind up requiring some regulatory intervention if need be.”

^AMBestTV is covering the VCIA’s annual conference. Exclusive interviews from the event are available at http://www.ambest.tv/vcia19.

Other VCIA-related coverage includes:

Rated Captives Build Surplus, Outperform Commercial Sector, Says AM Best Associate Director: Fred Eslami, associate director, AM Best, examines a new report that finds captive insurance organizations rated by AM Best have been growing surplus, returning dividends and reporting better combined ratios than the overall commercial insurance sector: http://www.ambest.com/v.asp?v=captivereport819.

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