A HISTORY OF CICA
However, it has not been all plain sailing for CICA. As Mead outlined, the association did introduce a couple of initiatives that failed. The first of these was an attempt to establish a fronting company to represent CICA’s members, but this “failed to gain traction”. However, in time—and perhaps with a little prompting from CICA’s efforts to form a fronting entity—captive fronting became simpler, Mead said. The second was an attempt to pool CICA captives, but that also failed to get off the ground. However, in both instances valuable lessons were learned and association discussions “helped to build cooperative relationships between members”, Mead said. And as Rosenbaum explained, “if it wasn’t for a forum like CICA, there would never have been an arena in which to discuss these efforts”.
Future challenges Looking to the future, Rosenbaum said that there were both challenges and opportunities for CICA. Opportunities include developing a more international outlook and outreach programme that might include global conferences, Rosenbaum highlighting the 5500 captive entities that exist around the world as a possible caucus of cooperative partners. First among the challenges is the looming threat of Solvency II. Rosenbaum said that the European Commission had made clear its intention to make the regime a global regulatory standard, adding that China and the US were also both taking steps to introduce more stringent regulatory guidelines. These moves would create significant challenges to the industry, but as Rosenbaum indicated: “when the time comes, CICA will be there to help captives cope with shocks such as Solvency II”.
Regarding its future work, Harwick said that the “CICA board is committed to moving forward with a full-time advocacy role” by bringing onboard a full-time governmental affairs associate “to track what is going on in the various domiciles, and to serve as a response coordinator and educational spokesman”. It seems that CICA’s future is bright, as the association plays an increasingly prominent global role in future captive development and education. Here’s hoping the next 40 years are as exciting as its first four decades as a leading advocate of captive insurance. l
16 CICA | Forty years of captive leadership
A buoyant industry The captive industry finds itself in a remarkably buoyant position today, despite a run of soft years in the commercial sector. Boughner explained that “whereas 10 years ago companies formed captives to be reactive to market conditions, nowadays most companies that consider captives are thinking strategically. It is not so much what they can do with a captive now, but what they can do with it in the future and where they want to take their captive”. This has meant that despite a run of soft years, captive formations have remained remarkably buoyant.
Further helping captive numbers along has been interest in group captives, which has risen markedly in recent months on the back of US health care reform, and rising demand in cell captives. As Jones indicated, “not only will existing captives in the health care sector be much larger, but there will be a lot of new captives to insure newly formed accountable care organisations”. Health care reform looks set to be a boon for the captive sector. Meanwhile a number of domiciles have introduced cell captive legislation to cope with rising demand in that area, while a number of others are weighing up passing enabling legislation. “Going forward there will be more opportunities to fit the needs of captive owners with those structures they can use, with this dynamic stimulating more captive development and growth,” Jones said.
At the same time “the universe of those that can own captives is getting bigger”, said Rosenbaum, with captive insurance “no longer the preserve of multinationals”, with smaller and medium- sized firms also able to take advantage of captive capabilities. He predicted greater captive numbers in the future, adding that “CICA is well prepared to help them along as well”. Jones concurred: “there has been a significant evolution in the structure of captives and the menu at the cafeteria keeps on growing”.
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