In the last few decades, captive insurance companies have become more common. These captive arrangements provide many benefits to their parents that could include cost savings, tailored insurance coverage, and more control. However, in an increasingly complex and regulated business environment, captive insurance companies and their parent companies face new pressures. These include pressures to validate, consolidate, and access ever-increasing amounts of data. With that in mind, it might be helpful to consider some of today’s major captive insurance challenges.
1. Burdensome Regulatory and Governance Reporting Requirements
Today’s captive manager needs rapid access to high-quality data for reporting, auditing, and analysis requirements. While speed of access is sometimes important, accurate data is critical for reporting and decision making. The problem is that a large number of parent companies and captives still reply upon an outdated data collection. These old systems might consist of multiple, local computer systems, spreadsheets, and even physical files.
2. The Parent Company’s Financial Reporting Requirements
While satisfying government reporting requirements presents one challenge, satisfying the financial reporting requirements of parent companies presents one that might be almost as tough to meet. Corporations need to understand the exact impact of their captive company on their overall finances. Because of this, they demand comprehensive, detailed, and accurate financial reports.
3. The Need to Supply Auditors and Third-Party Carriers With Data
Both internal actuaries and outside reinsurance companies demand more and better data in order to help set pricing for various types of policies. The ability to supply this information helps all parties make better decisions and get the right kind of coverage.
4. Better Overall Risk Management
Besides just providing their parent companies with insurance policies, captives are expected to help with a variety of other risk-management functions, just like good third-party insurance companies and insurance brokers do. A streamlined system to input, manage, and report upon data can help with a variety of different decisions that involve risk management.
5. Demonstrate Value
More and more, parent companies ask their insurance companies to clearly demonstrate their value to the organization in terms of saving money, providing better coverage, or adding other benefits. Captive management needs a way to produce the reports that can help demonstrate just how the insurer services its parent companies.
New Tools for Meeting Captive Insurance Challenges
Today’s captive managers already know that the increasing challenge of managing data for a variety of different requirements requires more robust tools than the ones that may have been fine in the past. That’s why progressive captive insurance companies are turning towards good risk management information system. These systems provide a consistent way to input, manage, and report upon data all across large organizations, and this includes both the parent company and the captive insurance company. At the same time that data actually gets much easier to manage, the quality of data improves dramatically.
