Insurtech boom drives innovation for captives: VCIA panel
Innovation will become increasingly important for captives, especially as the insurtech sector continues to evolve and captives’ parents embrace new technology, if they want to stay ahead of the competition.
A panel discussion at the Vermont Captive Insurance Association’s (VCIA) annual conference agreed that companies that innovate are usually able to gain a competitive advantage over their rivals.
Cindy Holmes, vice president of pension investments and insurance & claims at US grocery company Kroger, explained that her company was a long-term user of captives, which meant it had pandemic insurance policies in place even before COVID-19. She added that the company now has two captives, both rated by AM Best, and it is constantly looking at innovation. One area it is examining is the use of technology to monitor stock.
Dan Teclaw, associate director at AM Best, described how rating agencies view innovation in both captives and parent companies. He said that when AM Best looks at innovation in captives it also considers leadership, innovation in products and processes, and capital management and efficiencies. It also considers whether the culture of a company is conducive to innovative thinking.
Teclaw specifically pointed to Kroger as an example of a company that has evolved into an innovator, embracing trends in its sector. The grocery/food delivery industry is being transformed as more companies use technology; those that also have captives can also adapt their risk transfer profile as needed.
Andrew Johnson, global head of Gallagher Re InsurTech, specifically highlighted the rise of insurtech as delivering a wide range of innovation into insurers of all classes. He pointed out that insurtech funding has risen quickly in recent years, particularly over 2020-21. He stressed that insurtech is an area is both fast growing and directly linked to innovation and change.