CICA Special Section

CICA passes the torch

By Michael J. Moody, MBA, ARM

Industry service organizations typically change their volunteer leadership every year, and the upcoming CICA International Conference is no exception. This year’s incoming board chair is Claude Parenteau, president of Parenteau Associates LLC of Easton, Connecticut. His firm is actively involved in the captive insurance marketplace, providing advice and counsel on investment-related services. Parenteau has more than 20 years’ experience in the investment arena, and he has been active in CICA for about 10 years.

Parenteau notes that “2009 will be a year of change, both within the captive insurance industry as well as outside.” And he points out, “The current conditions within the financial service sector are bound to change the way the world looks at captive insurance companies.” And he adds, “The insurance marketplace will also change during 2009.” He observes that as always, the pendulum swings both ways. “Today, insurance companies are becoming much more risk averse and, as a result, underwriters are going to demand more premium for taking a risk than they had been.”

In addition, “The investment side of the house will offer much less in the way of offsetting the underwriting losses.” Parenteau says Treasury instruments today are at 1% or less, “so investment returns are not going to be the same as they had come to expect in prior years.” As a result, he says, “I don’t see any way we can stay in the soft market.” Ultimately this should result in more interest in the alternative insurance market, he believes. “Typically this point in the underwriting cycle is the time for significant captive growth.”

Continued growth

While CICA’s new chair has a number of goals for 2009, he says his most pressing one is “to continue to increase the visibility of CICA. As I talk to captive owners, I continue to be surprised how few know what CICA is. My number one goal this year is to continue to build an awareness of CICA and how a membership in the association can help captive owners.”

While there are a number of reasons for this lack of awareness, Parenteau points out that captive owners typically deal only with the captive managers and several other service providers, as well as their domicile regulator. So unless their captive manager tells them about CICA, they probably won’t know that there is a captive industry trade association out there for them. One way CICA is trying to broaden its visibility throughout the industry is by utilizing a marketing firm.

One of the real problems within the captive industry, according to Parenteau, is the lack of a comprehensive directory of captive owners. “The sole exception,” he points out, “is within the RRG’s side of the house, where there are publications that do report on ownership-related information.” But for group or single parent captives, there is a significant lack of recent and relevant information on owners.

Parenteau notes that this is directly opposite of what occurs in the pension and retirement areas, where “there are a number of publications that provide critical information on the decision-makers within the pension and retirement areas of most corporations.”

Changing perception

Obviously, the captive managers know who their client/captive owners are, but, to date, they have not been too willing to share this data. Parenteau thinks that “many times, the captive managers are concerned about competition from others when their clients go to outside meetings and conferences.”

He also points out that CICA needs to make the managers more comfortable with allowing their clients (i.e., the captive owners) to attend these types of meetings. “Since CICA has taken more of an advocacy role within the industry, it is even more important for captive owners to attend these types of conferences,” Parenteau says.

But it’s not just the captive managers that CICA is trying to educate. The association is also working hard to change the perception of CICA within the captive industry as a whole. Parenteau points out, “We are becoming more of a central, core organization within the captive community. As a domicile neutral organization, CICA has been beneficial for the entire industry.”

Not long ago, CICA was viewed by most captive domicile associations as a competitor. However, Parenteau says, “We have worked hard these past few years to build a partnership with both domestic and offshore captive domiciles.”

In addition to increasing the visibility of CICA, Parenteau wants to continue a number of other initiatives within the organization. He notes that the CICA Best Practices Guidelines, which has been spearheaded by Karin Landry of Spring Consulting, will be updated during the International Conference.

In addition, he points out that CICA is continuing to expand its fronting survey and has conducted a comprehensive membership survey to discern the needs of its members. New data provided by the fronting survey includes reinsurance limits and pricing and employee benefit information for the various captives. The study is done in collaboration with several domicile captive associations. Parenteau believes that these types of initiatives would be difficult, if not impossible, for a single state or domicile to do.

Conclusion

As Parenteau takes over the reins as CICA’s new chair, he will be working with Dennis Harwick, CICA’s president. And while this change will result in some modification to the board’s agenda items, one thing remains—the concern for increased visibility of the organization.

Over the past few years, CICA has expanded its advocacy role for the captive industry. And as such, Parenteau says, “They have filled the middle ground between the various domiciles.” Evidence of how well they have done can be seen in their successful approach to dealing with the IRS challenge in late 2007. With leaders such as Parenteau, continued growth within the captive insurance community is assured.