Rookie captive board members should solicit advice
Members of any newly-formed captive insurance board of directors should not be shy to seek advice and guidance on best practice – especially if this is their first time on a captive board.
They also need to appreciate the workload required from the start, attendees at the Vermont Captive Insurance Association’s annual conference heard when the issue was debated in a panel discussion.
“When first set your captive up, the first 90 days to six months is a lot of work,” said Clare Bello senior vice president, CCMSI. “How are you going to get your board together, who is going to be on your board? Who clarifies your lines of coverage?”
In a wide-spanning discussion with audience participation, Bello and Aileen Krehbiel, manager of captive insurance programs at John Deere, underlined that communication is key to operating a new captive, especially when it comes to appointing members of the board.
Bello and Krehbiel stressed that communication is a key aspect of operating a new captive insurer, with boards of directors having to absorb a lot of information about just how exactly they are providing insurance for their parent company.
One example provided was that of a hang gliding and paragliding organisation that had set up a captive as it could not get affordable insurance. This meant learning a great deal about insurance in a short amount of time.
Krehbiel said that short monthly meetings with key people within the captive could provide vital information while Bello stressed that board meetings need to be more than once a year.
In addition, board members need to know that there is nothing wrong with asking for advice if there is something about the captive or about insurance as a whole that they do not understand, the panel said. Adding additional board members with experience in insurance was also something that was highlighted as a possibility.