It was such a pleasure to be part of the European Captive Forum this year. The event, held last November 8 and 9, was filled with a lot of firsts: it was my first business trip as a member of Delonia Software; it was also my first time to visit Luxembourg, a city with so much charm, rich in design and natural beauty; and it was my first time to be part of the event, in fact, any related to captive insurance.
And just like any first-time experience, it had its fair share of surprises. As someone new to the industry, I was amazed by the business of captive insurance. Like any outsider, I was surprised not only by its existence, but by the flourishing industry and world it has built: a microcosm with many players and stakeholders. I was also astonished by the amount of business opportunities available. Although the concept of captive insurance has been around for over 100 years, it only seems to have been booming in the last 30. It was, in fact, mentioned by CICA (Captive Insurance Companies Association) president Daniel Towle that we are in the “Golden Age” of captives. And the opportunities present at this moment are not only available to captives, but to the businesses that support it. These positive surprises were, however, tempered by the challenges that came with it, including some wariness towards new technologies.
Here are my key takeaways from the event:
1. The industry is amid a Golden Age which means success for those who know how and can take advantage of the business that’s available. Quoting Zig Ziglar, “Success occurs when opportunity meets preparation.” This opportunity is not only present to captives but also to the businesses that support it.
2. There is a need to assist captives so that they can operate and adapt to the demands of today. Key areas would be in:
● Business Intelligence (BI)
● Process efficiency
● Speed of responsiveness and adaptability
3. One of the keys to taking advantage of this Golden Age is data. Business intelligence rests its foundation on data. In addition, the reliance on data is more important now, post-Covid, as it is trickier to make predictions. It was mentioned several times that post-pandemic numbers ran counter to expectations. As the world has entered new times, it is important to be prudent and to not assume we can reasonably predict things as we could before.
4. There is some concern when it comes to new technologies which is understandable. Salespeople and marketers tend to exaggerate technologies as a “one-stop-solution” that fixes everything to the effect of misleading the market and setting false expectations. This, as a result, hurts not just the captive business, but the tech industry as well.
5. In response to this, it is important for solution providers to provide personalized services to captives and not just offer a “one-size-fits-all” product. Just as captive insurance businesses are formed uniquely for the parent company, the solutions that are provided to them need to be personalized as well. During the talks, the differences in direction and priorities could be seen: some captives were focused on getting scale while others were more focused on ESG (Environmental, social and governance). Some felt the continuous short-term pressure of continuously selling the importance of Employee Benefits, while another was focused on managing healthcare and medical insurance through a mid-term strategy. An out-of-the-box solution is not the answer to any of these.
Moreover, it is crucially important for solution providers to work on building trust by being transparent and sharing not just the benefits but also the limitations of their solutions. It is also important not to rush in and change everything, but to focus on a more agile and evolutive approach to introducing solutions.
To sum up, this is a great time for businesses in the captive insurance industry. But just as all the opportunities are present, there are also challenges so it’s important to take the right steps to overcome them. I am looking forward to the next forum in 2025 to see and hear all the success stories!