Press Release - AUGUST 09, 2019
AM BestTV at VCIA: Regulators Say Overseeing Captives Requires a Different Perspective
FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 09, 2019
Provost, the deputy commissioner of the Captive Insurance Division of the Vermont Department of Financial Regulation, and Walker, director of captive insurance in the North Carolina Department of Insurance, said a top issue for them is the education of captive owners and captive insureds, as well as how the captive insurance company needs to be operated. Walker added that this especially holds true for her, as North Carolina is a newer captive domicile.
“Most business owners understand that there’s laws in place that they must comply with,” said Walker. “There’s a few that don’t fully understand that though, and perhaps may decide to take out a dividend or take a loan from the captive insurance company and use it for other purposes, which may be fine, but they do need to get the approval of the department first.”
“For a lot of the captive owners, this is their first experience being a regulated entity,” said Provost. “If you’re a construction company, you have rules to follow with zoning rules and things like that, but not rules about what you can do with your own money.”
Provost also said larger group captives can be more challenging to regulate compared with single-parent or smaller group captives.
“A group captive is much more like a traditional insurance company, a commercial insurance company, especially the largest groups where the membership might not really be involved in operating the insurance company,” said Provost. “If you don’t have that involvement, a group can function less cohesively, which can wind up requiring some regulatory intervention if need be.”
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