Captive Insurance Companies Association (CICA) Special Section
Optimal Results
The 2008 CICA International Conference March 5-7, 2008
By Michael J. Moody, MBA, ARM
Tracing its roots back to the early 1970s, Captive Insurance Companies Association (CICA) will host its 36th annual International Conference, March 5-7, 2008, at the Westin Kierland Resort & Spa in Scottsdale, Arizona. As the only domicile-neutral association, CICA promises a conference that provides an excellent overview of the captive industry as well as its challenges and opportunities.
This year’s conference, titled “Turning Best Practices Into Optimal Results,” is designed to highlight the “best practices” in the world of captives, according to Dennis Harwick, CICA president. He notes, “We feel that a program that provides educational sessions, networking events and exhibits is the best venue for learning what it takes to be successful.” Further, he points out, “We believe that one of our most powerful resources is the collective experience of the industry’s practitioners who are leading the way, thus the emphasis on best practices.”
Conference overview
This year’s CICA Conference will begin on Wednesday, March 5, with several pre-conference educational sessions, including the successful Captive 101 and Risk Retention Group 101 sessions. Both programs are designed to provide vital basics about captives and are appropriate for novices and veterans alike.
A new pre-conference session this year is “Escaping the Crisis: What’s Next for Health Care Captives?” It is widely recognized that health care captives make up one of the largest segments of the captive industry. This session will offer suggestions as to how these captives can survive the current soft market, including an expert panel that will provide insight into the value and viability of continuing to insure health care risks in a captive.
The conference’s opening general session again will be highlighted by a dynamic keynote speaker: veteran business journalist Stuart Varney. Varney is the Fox Business Network anchor and is well known for his frank assessments of how politics affect current economic conditions. In addition to Varney, the opening session will also feature announce-ment of the winners of the 2008 CICA Distinguished Service Award and the Outstanding Captive Award.
Conference sessions
The remainder of the conference will feature a variety of captive-specific sessions. Among the currently scheduled sessions are:
• “Captive Contributions to Corporate Strategies”—This session will look at the important issue of how to use a captive as a management tool that, when properly structured, contributes to the execution of overall corporate strategies. Participants can get the inside track from experts as they provide examples of potential revenue streams. Examples include reinsurance for a corporation’s captive, new insurance products, and financial solutions where the captive can be used to increase revenues and profits for the parent.
• “Program Business: The Evolution of Group Captives”—Recent developments in the fronting arena have risk managers seeking to secure tax deductibility and quota share reinsurance. As a result, captive owners are finding that program business strategies can enhance both their value proposition and bottom line.
• “Segregated Cells”—Segregated cell captives have become a viable risk-financing option. This session will provide an overview of the advantages and challenges that need attention when one is considering and using the segregated cell structure.
• “The World of Reinsurance Collateral”—This important session will present an overview of the Regulation 114 Trust, which is becoming more of a mainstream collateral option. The benefits and drawbacks of this option will be discussed. Information will be provided from the perspectives of a fronting carrier, the captive manager, and the insurance asset manager.
• “What Makes a Good Domicile?”—The growing pool of domiciles offers captive owners a wide variety of locations where they can house their captives. This session will examine the factors to consider when analyzing potential domiciles. Captive managers will have an opportunity to share the characteristics they consider most important as well as what priorities a captive should have when reviewing domicile options.
• “Employee Benefits and Diversifying Risk”—This session will highlight the fact that employee benefits are considered to be third-party risks and, as such, can help diversify the captive’s risks. Recent proposed IRS regulations will be discussed, as well as how insuring employee benefits in the captive can have a significant impact on the captive owner and its employees.
New sessions
This year CICA will introduce several new sessions, including two new forums. The “Captive Owners Special Forum” will provide owners the perfect place to have a candid dialogue about their day-to-day challenges and issues of captive ownership. Among other topics to be addressed are how captives are being used to increase value and success. Attendance at this session is open to captive owners only.
The “Service Providers Special Forum” will feature an open dialogue between CICA leaders and service providers. The session is planned as a venue to exchange information and ideas about the association’s plans and service providers’ needs. The forum is designed to help CICA find ways to help service provider participants maximize their value. This session is open to captive service providers only.
For a number of years, CICA has presented the results of its Fronting Survey at the annual conference, which will continue this year but greatly expanded over prior years’ surveys. In addition to traditional fronting information, CICA has begun requesting expanded financial information from survey participants, for better analysis. They have also started to include information regarding the captive’s use with employee benefits. This year’s survey should provide greater insights into how captives are being used as well as how individual captives compare with the latest industry averages.
CICA’s fall seminar featured the presentation of several captive case studies. CICA was able to foster an atmosphere of informal information exchange on the best and most innovative practices in the captive industry. Based on the success of the fall session, a new session at the annual conference will present highlights of the fall seminar via two case studies which will reveal what really works. The case studies will include information about innovative and unusual lines of captive business, third-party risk, workers compensation, and using the captive as a profit center.
Finally, a special session will provide participants the latest news regarding “IRS Proposed Regulation on Intercompany Insurance Obligations.” CICA’s primary legal consultants will review CICA’s efforts and response to the proposed regulations. They will provide background information about the proposed regulations as well as the likely effects should the regulations become law. This is a don’t-miss session for anyone in the captive industry.
Summary
Although change is constant in the insurance business, this year change and its accompanying challenges for captives will affect the long-term success of many captives. The 2008 CICA International Conference is an ideal place to get the most up-to-date information about issues of concern to the captive market. Whether it’s soft market strategies for group captives or the effects of the proposed IRS regulations on single parent captives, this conference will have the latest facts and figures. CICA has long realized that providing a venue for high-level, peer-to-peer networking combined with industry-shaping educational sessions was the best way to prepare its members to succeed. The 36th CICA International Conference is certain to achieve that lofty goal.
For more information about the conference, go to www.cicaworld.com.