Shutterstock_2044070501 (1)
12 August 2022Reinsurance

Talent, hard rates and ESG: the challenges captives face

The captives market is facing a number of challenges, attendees at the Vermont Captive Insurance Association (VCIA) heard in a panel discussion featuring David Provost (pictured), the outgoing deputy insurance commissioner of Vermont.

Provost, his successor Sandy Bigglestone, Mark Falloon, principal vice president and manager at BLC Insurance, and Jeff Tucker, senior account executive at Aon Risk Solutions, identified six key areas that the market should be looking at.

According to the panel, labour challenges are one of the leading worries for the market, with finding and retaining employees a challenge, along with succession planning. This is not just an issue for Vermont, it’s a global issue, the panel found.

Tucker urged companies to seek out and engage talent and listen to employees, as it’s no longer enough to go to job fairs at colleges – the net must be widened.

Bigglestone stressed that the Vermont Department of Financial Regulation recognises the importance of this and has been taking on more staff to deal with it. She said that collective action might be needed on this, even if on a virtual basis.

The panel underlined that it was important to communicate the career opportunities in the captives market; some panellists called for risk management courses covering captive insurance to be added to college curriculums.

Another issue affecting the captive industry is the hard market. Provost said that there is no sign of the market softening in any way and the panel agreed that higher retentions are being seen in captives as a result.

Another issue highlighted was environment, social governance (ESG); the panel said ESG was now affecting all lines of business in captives, with the panel agreeing that captives might be able to help parent companies meet ESG quotas/targets.

Cyber security represents another big issue, with ransomware being highlighted as a most challenging issue. Again, this is an issue where captives can help the wider market.

The final hot topics mentioned by the panel were employee benefits in the captive space – life & disability, dental & vision, pet insurance and medical, which have seen an uptick in interest on a global scale and parametrics, which is seeing challenges from the accounting side due to differences between states on risk transfer and insurance issues.