Captive Insurance Companies Association (CICA) Special Section
New Chair for CICA
By Michael J. Moody, MBA, ARM
As with most professional organizations, CICA’s annual meeting typically marks changes in the makeup of the board of directors. This year’s incoming chair is Michael Lusk, vice president, insurance and risk management, at Archer Daniels Midland (ADM). He has been active in CICA since 1999 when he joined ADM.
In addition, Lusk was involved with CICA when he worked for International Risk Management Group (IRMG), which at the time was one of the service providers associated with CICA. He says, “Many of the original CICA members were also IRMG clients.” In fact, he says, “IRMG has always been a strong supporter of the CICA (domicile neutral) concept.” Lusk has a long association with CICA and will bring a wealth of experience to his new position.
Recent improvements
An important change Lusk points to is the recent addition of CICA’s first paid employee, Dennis Harwick, who serves as CICA president. “Hiring Harwick was a significant step in the growth of CICA,” Lusk comments. He observes that it is difficult to make meaningful progress with an all-volunteer board and committees. “And while we have always done a good job with most of the tasks involved in running CICA, the board always recognized they needed a full-time staff person to work behind the scenes, making sure that all the machinery is working correctly.”
While Harwick’s addition has been helpful on many levels, a key area Lusk points to is communications, which he believes will play a major role in the long-term success of CICA. “Communication with the members has been great,” Lusk says, and he pledges to continue that effort.
Lusk also points to positive developments on the educational side of the equation. For example, he says, “We are constantly trying to improve our conferences.” In that regard, he notes, “We are doing a much better job of gathering the session evaluation forms and using that information for upcoming conference planning.” The 2008 International Conference, Lusk says, will show the results of that work.
Big changes ahead
The year 2008 will mark a major change for CICA as it takes a more active role in helping members assess their best practices with regard to captive operation. In fact, the CICA Best Practice Guide, which has been under development for about a year, will be formally presented to the membership at the 2008 annual conference in March.
A key reason CICA developed the Best Practice Guide, Lusk says, is that members were constantly asking: “How do I know I am running my captive correctly?” As a result, he explains, “over the past year we have been working with both domicile regulators and industry leaders to identify the ‘best practices’ that captives should be operating under.”
The Best Practice Guide will be available in print form, and a session at the upcoming conference titled “Best Practices and Governance” will provide insight into how the new Guide was developed and how it can be used to position a captive for the future. Lusk points out that CICA tried to obtain sufficient information “to come up with something that everyone could agree to.” He is quick to point out that “CICA is not trying to be in the rating game”; rather, he says, “We are providing a guide for people who want to operate their captive in the best fashion.”
Objectives for 2008
CICA’s new board has spent considerable time developing its 2008 objectives, Lusk says; however, “They realize that these plans will have to be tempered by the actions of the IRS and their proposed regulations.”
As CICA chair, Lusk will be involved in formulating a strategy should the IRS persevere with its proposed legislation. Should that be the case, CICA will continue to work with other interested captive associations to address any legal challenges and pursue other remedies that may be available. In many respects, the proposed regulations will shape the way corporations structure their captives, and CICA will stand ready to help those organizations and captive owners deal with it.
Additionally, because ADM is one of the few entities that is actively using its captive in conjunction with its employee benefits programs, Lusk is interested in advancing this initiative for other captive owners.
Although movement in this direction has not been as brisk as had been anticipated, Lusk points out that “ADM continues to expand into other benefits programs and to look for other ways to use its captive.” As to why other companies have not yet used their captives for employee benefit programs, Lusk is not sure. But one thing is clear, he says: “Employee benefits is a large cost area, and you will always find people looking to finance them in a more efficient manner. Captives can do that.”
Uniquely qualified
Michael Lusk has a unique vantage point from which to take over the leadership of CICA. As one of the few captive owners who have been involved with employee benefit programs as well as with the Best Practice Guide, he is well qualified to steer CICA through this challenging year.