Captives engage with new risks; but VCIA panel heralds caution

Alternative use cases for captives are constantly changing, a panel of senior executives told delegates at the 2024 annual conference of the Vermont Captive Insurance Association.   

One of the last sessions of the first day of the conference was a panel discussion aimed to explore potential different types of insurance coverages and risks that can be insured through a captive such as voluntary benefits, cyber risks, parametric coverages and pandemic risks.  

Moderated by John Ferrara, managing director, actuarial practice at Crowe LLP, the panel featured Krystie Dascoli, voluntary benefits practice leader at Marsh McLennan Agency, Blair Garland, captive practice leader at Graham Company and Jo Mather director, global insurance at Spirit Insurance Company. 

The panel agreed that it is important for captive insurance companies and their owners to recognise potential alternative use cases for captives beyond traditional risks, gain more insight as to strategies for captive growth and identify certain captive risk management practices to react to future industry or environmental changes. 

The reasons behind looking at potential alternative use cases at the present time includes a rise in nuclear verdicts & other issues that have been causing large rises in claims. As a result, more alternate uses for captives are being demanded due to higher demand. 

Some of the other alternate use cases that the panel identified included gaps in excess/ reinsurance towers, owner / operator occupational accidents, independent contractors and reputational risk. 

The panel talked the audience through a number of case studies in which it was clear that creating a captive instead of previously traditional insurance coverage could result in significant cost savings, added protection and in some cases the building up of surpluses that could then be used to benefit the captive’s owner. 

However, it was stressed by the panel that it is important that the full benefits of the captive be stressed throughout the parent company, to avoid any misunderstandings with staff who are not familiar with captive insurance. 

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