Regulators must keep pace with rapidly changing captive market
Regulators must keep pace with what is now a rapidly changing captive insurance market, according to a panel at this year’s Captive Insurance Companies Association annual conference.
The current hard market is one of the biggest drivers of this rapid evolution as companies consider the use of captives more than they have before, the panel said.
The panel also underlined the evolution of the captive market as it grows and diversifies. The number of lines of business being dealt with by captives is increasing, as is the variety of structures used. As a result, the market wants regulators to keep pace with these changes.
Moderated by Gerald Yoshida, partner at Goodsill Anderson Quin & Stifel, the panel also comprised: Sandy Bigglestone, deputy commissioner, Captive Insurance Division, State of Vermont; Kara Ebanks, head of Insurance Supervision Division, Cayman Islands Monetary Authority; and Mark Wiedeman, director, Tennessee Captive Insurance.
The panel was a continuation of last year’s New Sheriff (Regulator) in Town session, and interviewed experienced regulators from some of the larger domiciles.
The panel also agreed that it is important to keep regulations relevant to the market – consistency is important.
Ebanks said that Cayman follows the regulatory framework of the NAIC closely, but it can be hard to make sure that some elements are relevant if they make changes to some commercial areas.
The panel agreed that it is Important to be as flexible as possible but conceded that risk management issues are increasing.
Bigglestone urged attendees to keep an eye on the NAIC and what is being proposed as there might be overlap onto the captive world. Regulatory creep is always going on.
She stressed that regulators have to know what’s happening in the commercial market and why it’s happening. You have to anticipate needs based on what companies are looking for – or might need in the future.
Another challenge is to attract and maintain regulators and staff, to keep up with this changing captive environment, especially when it comes to handling regulatory exams.
The panel concluded by urging regulators to talk to each other and co-operate on information about new risks and new challenges.
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