As you’ve probably noticed, it’s a pretty cut-throat world out there.
Companies are continuously jostling for market share, each trying to out-do one another in delivering the best, freshest and most exciting products or solutions to the ever-growing demands of an increasingly astute customer base. Standing still just doesn’t hack it – instead, businesses in all sectors need to find more and more ways to remain relevant or face potential extinction.
Would you expect any business that ignored changing needs and kept its head firmly in the sand to be successful, or to even survive?
Bizarrely, that’s exactly how many companies behave when it comes to their captive insurance strategy.
The traditional captive insurance company is a full-on group subsidiary, yet, in many cases still, it is treated in a different way to other such business units. In my experience, many captives have remained traditional, risk-retention vehicles, often participating in vanilla lines of cover, and at relatively modest levels of self-retention that have scarcely changed over years. It’s almost a case of, If it doesn’t cause a problem, it must be fine.
But is that really the best way to run a subsidiary company that uses up valuable group capital, operational cost and management time?
As group boards begin to increasingly question the value that captives bring to their businesses, and as regulators introduce—through new frameworks such as base erosion of profit shifting (BEPS)—more robust requirements to assess and demonstrate captive value and substance, risk managers need to focus on how they are ensuring that their captives continue to meet the demands of an ever-changing business environment.
Where to begin
So, as a starting point, you could ask your ‘customers’ what they need and expect.
Hosting internal risk strategy meetings with the key business managers within your organisation can be an excellent way of getting a real understanding of the issues that concern them. Making these discussions open and frank can often highlight risk concerns that might not always become apparent from more formal insurance reporting processes. Helping them to understand how a captive works, and how it might be able to respond to their specific issues, not only offers the potential for new solutions but helps more of those in your organisation to understand the value and relevance of a captive to the overall group business strategy.
As a next step, meet with your sales and marketing teams. Find out what it is that, in their view, prevents more sales, or might enable your business to differentiate itself from your competitors. Finding a role for your captive in supporting sales growth by, perhaps, providing an end-customer benefit that helps to clinch a deal that might otherwise be lost is a fool-proof way of justifying the value of a captive to your board.
The point is that, whatever your business, your colleagues will, on a day-to-day basis, be facing a wide range of challenges which, in some cases, just might fall below the traditional insurance radar. Taking the time to host periodic brain-storming sessions might just highlight opportunities for your captive to add real value, over and above traditional expectations.
Remember, your captive insurance company is a subsidiary in its own right and, like any business in today’s highly competitive world, it needs to find ways to better engage with its customer base in order to grow and to remain relevant.
It might just be that those customers are your very own colleagues.