More captives grasp the potential of ERM programmes

An increasing number of captives are using their retained earnings to launch new enterprise risk management (ERM) programmes.

This is according to Nate Reznicek, director of operations at CIC Services, who spoke to Captive International ahead of the CICA 2018 International Conference in Scottsdale, Arizona.

“Captives are not a ‘set it and forget it’ endeavour,” said Reznicek. “The best captives change to mirror the changes of the underlying insured’s operations and exposures. The growth of reserves should be continually evaluated and utilised to their fullest in order to match the risk appetite of the captive owner with emerging and profitable risks.”

ERM is the discipline by which an organisation - regardless of industry - manages risks and seizes opportunities for the purposes of increasing its short and long-term value to its stakeholders.

Reznicek explained that CIC Services has carried out a number of case studies that show that captives are developing and implementing a strategic and profitable approach to take on more risk through these ERM programmes.

Furthermore, he said that having such a plan in place allows for the captive to quickly adapt and take advantage of any changes in the commercial market.

“We believe that the days of commercial market scoffing at the validity of enterprise risks is numbered,” he continued. “As has been the case in the past, captives and their ownership continue to lead the way in the development of new coverages. Captives will continue drive innovation and the commercial market will be forced to react or be subject to more adverse selection.”