ACA’s Risky Business programme can strengthen industry links with regulators

09-03-2020

The Alabama Captive Association’s (ACA) Risky Business programme can strengthen ties between the industry and regulators by offering selected students internships with the Alabama Department of Insurance (ALDOI). 

The Risky Business programme has been designed to encourage a new generation of students to consider careers in the captive and alternative insurance industries, as many of its current employees approach retirement age. 

ACA has partnered with the two universities in the state that offer risk management and insurance (RMI) courses, Troy University and the University of Alabama, to deliver the programme. Ed Pappanastos, Scholar in Residence with Arsenal Insurance Management (Arsenal) and Risk Management professor from Troy University, has been instrumental in developing the internship programme.

The programme lasts for 18 weeks. The first of these provides a general overview of the industry where students learn the basics of insurance and risk management, including what captives are and how they work. Students then spend five weeks interning at three different participating ACA member companies to give them more practical experience of different aspects of the industry. 

Companies participating in the programme include alternative service providers, traditional insurance companies, TPAs, actuarial firms, consultants, as well as the ALDOI, where students will learn about the work of the captive regulator. 

Justin Law, managing director of strategic initiatives at Arsenal, which has led the development of the programme, said: “We are particularly excited about ALDOI’s involvement with the programme. This is a huge opportunity to spend five weeks with the regulator to get to know them, what they are trying to achieve and how they are going about doing that. We want the interns to learn that regulation is a tool that is there to help the industry, not work against it.” 

He added: “The programme will teach students about the captive and alternative insurance industry, and hopefully encourage some of them to come and work in it. But it is also about giving them the opportunity to build relationships, there is a huge networking element to the whole Risky Business programme.”

Interested students would need to have a 3.25 grade point average and have completed a course in risk management. They would need a letter of recommendation from one of their RMI professors. 

The programme also engages with high school students and held the first high school related event on March 4. Pappanastos establishes events at high schools to identify potentially interested candidates, who will then be given the opportunity to attend a one-day event over the summer months where they will learn more about employment opportunities in the industry. 

Law said: “It makes sense to engage with students that are at the stage of their education where they are thinking about what they want to major in, and where they want to go to university. If they are interested in the captives industry they can identify which universities offer the appropriate courses to develop that interest.”

Meanwhile, the ACA believes Alabama is well positioned to capitalise on the growth of the captive industry in coming years. With most Fortune 500 companies already having captives, it believes growth is most likely to come from smaller captive owners and branch captives. 

Alabama is attractive to smaller captives because of its low premium tax of 0.04 percent, and its premium tax cap of $100,000. It is also in the process of amending its legislation around branch captives to allow them to write any kind of insurance - they were previously only allowed to write employee benefits cover. 

Norman Chandler, founder and president of Arsenal, said: “Branch captives have real potential for growth. A lot of large companies already have captives, but if they can open new captives in different states, to insure their risk exposures in those states, that could be an attractive option to them, especially if the premium taxes and regulation are favourable.”

Alabama Captive Association, Arsenal Insurance Management, Justin Law, Norman Chandler, Troy Univesity, University of Alabama

Captive International