Captive risk management drives success

It’s possible to leverage your captive's prior success to navigate today's challenges, according to one of the last panels at the first day of the Cayman Captive Conference.

The panel comprised Mike Meehan, principal at Milliman, Bruce Whitmore, director / senior consultant at WTW, Judi Cranberg, executive director, Risk Management Services, Froedtert Health and Martha Raymond, vice president & risk & compliance Officer at Multicare Health System.

Captives can be a strategic enabler, the panel agreed, with many created to fit a specific need due to issues that make some things hard to insure via the traditional market.

Raymond explained the reasons behind the creation of her company’s captive, such as increased retention. Commencement Re, the captive her company owns, covers a healthcare system in Washington State, with some assets in Oregon and Idaho. She explained the way that the captive is evolving and changing, with a strategic plan laid down that has included the creation of separate cells to add to the whole.

She also said that it was important for a board of directors to focus on risk management and cost issues due to the needs of healthcare, especially in a state like Washington, where hospitals regularly lose money.

Cranberg talked about her own company’s captive, Hert’s Mills Insurance company SPC, which covers Wisconsin-based healthcare assets. She said that the captive was created due to a need for risk financing control, risk consolidation and enhanced governance.

She agreed that risk management had been an important area for the captive, with study of the risks that it was covering leading to a steady evolution of its thinking on what should be covered by the captive and what should be covered by commercial insurance.

Some of the drivers of changes to business plans include increasingly high awards from legal verdicts and other areas, the panel agreed, adding that more and more lines are being insured by captives due to concerns about areas like cyber.

Planning, education, strategic thinking and communication were all highlighted by the panel, which stressed that by looking ahead it’s possible to manage risks in a controllable and manageable way.