Can captives meet the talent crisis ahead?
The US captive market is facing a talent crisis that needs to be addressed if it is to make the most of a wide range of potential opportunities.
Anjanette Fowler, managing director of the Insurance Solutions Group at PNC Institutional Asset Management told Captive International that there is a huge generational gap between more established professionals and younger professionals. This mid-career gap is creating a lot of pressure in terms of being able to support and service all the demand coming into the captive industry right now.
“Separately, there has been this resurfacing of scrutiny on 831(b) captives, and that ties in with the importance of educating folks about the merits of a captive,” Fowler explained. “Overall, I think the industry is doing a good job of utilising these risk-financing structures the way they are intended to be used.”
Looking at the gaps in the recruitment market, Fowler said that there’s no question professional development is key. PNC has an active analyst program within its Asset Management Group and their team is engaged with that process to try to find the best talent coming out of that program, which is how the company is approaching that next-gen aspect.
On the mid-career gap, Fowler thinks there should be more dedicated campaigns to recruit mid-career accounting, actuarial, tax, finance, healthcare, cybersecurity, and legal professionals who are either looking for a career change, or potentially being impacted by automation, AI, and tech advancements. A lot of those industries fit in nicely and would provide a solid foundation for understanding the captive insurance industry.
She added that CICA has done very well with the NEXTGen and Amplify Women initiatives — both of which are increasing industry awareness and participation.
Fowler underlined that ‘Captive’ is not a foreign term anymore. The processes for creating and using a captive structure are much more popular and refined, and the reinsurance market has become easier to navigate. It seems like a more cohesive industry than even just a few years ago.
She said that what’s traditionally been called “alternative risk financing” is now no longer alternative; it is now almost a necessity that you have this risk-financing tool in your toolbelt. Education is a critical component of getting that message through.
“I should note that CICA, as a domicile-agnostic association, has done a phenomenal job helping captive owners and prospective captive owners understand the ways they can leverage their captives,” she stressed. “In fact, we’re aware of folks who have attended CICA before even forming their captive just to get a better understanding of the different processes, from feasibility to formation and beyond, as well as the overall risk management and total cost of risk implications to their organization.”
Finally, with natural catastrophe losses seeming to increase every year in the US, could captives provide a solution? Fowler responded with: “A resounding, absolute “Yes!” Not only could they provide a solution, they are actively providing solutions. Whether an organization is in a geographic area that is prone to natural disasters or not, the reality is everyone is going to feel the impacts of these catastrophic events, directly or indirectly.”
She said that some risk lines are more pressured than others, but captives certainly provide a solution away from the traditional market that helps abate some of those pressures. PNC is seeing that in its client base every year.
At the end of the day, a captive is going to provide an organization with greater control, a smoothing of risk-financing costs, and a broadening of options and solutions, she explained. Once an organisation starts to head down that path, they generally quickly embrace the benefits and lean into optimising the use of their captive not just in risk transfer, but also in how the premium and capital associated with those risks is invested or utilized.
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