Captive owners should be working closely with captive associations in order to seize the initiative in captive development, rather than leaving matters to captive managers and consultants.
That is the view of Gregg Sgambati, president of the New Jersey Captive Insurance Association (NJCIA), who said that it is important that parent companies influence the direction of the industry, particularly as it deals with emerging risks associated with reforms such as the Affordable Care Act.
He said that while captive managers have been progressive at times, captive owners are in the best position to take novel steps and be pro-active in developing their captive innovatively. Sgambati said that while there is great interest in emerging risks, it is during discussions around application that this interest tails off.
He said that associations such as the NJCIA can work closely with parent companies to help them understand what direction they want to take in their development. He explained that the NJCIA intends to place greater emphasis upon education as a result.
A competitive dynamic
Addressing the rising number of US domiciles with captive legislation on their books, Sgambati said that the dynamic will encourage new entrants to consider their home state first and foremost as a reinforcement of their good corporate citizenship. He said that industry dominance in particular states would also help to determine domicile choice, although he added that traction will necessarily take time.
Domiciles will need to prove themselves, he said, with their relative stature growing over an extended period. Sgambati said it is important to be flexible and available and to build reputation and capabilities for the long-term.
Sgambati said the expectation is that New Jersey will at least double its captive numbers in the coming three years, with the state looking to formations among larger parent companies and the lower echelons of mid-market Russell 3000 companies, he said.
He was bullish about the state’s prospects, saying New Jersey had achieved a lot in three short years.
New Jersey, NJCIA, captive insurance, US