Our North Carolina Team and Insights from the NCCIA Conference

By Alyssa Preidt

Our Newest Team Members: Jeff and Alyssa

Jeff and I would like to say that it is our great pleasure to be Capterra Risk’s North Carolina team.

  • Jeff Ellington, Senior Vice President, has been in the insurance industry for over 35 years and has a wealth of knowledge and experience. He began working in the captive industry over 11 years ago and has been very active in the industry ever since.
  • I, Alyssa Preidt, Underwriting and Claims Manager, have been involved in the insurance industry for 5 years, almost to the day. I received an offer to work for a captive management company right out of college and was so fascinated by the concept of captives that I couldn’t turn it down.

Jeff and I began working together two years ago, also, almost to the day. I’ve had many mentors and leaders in my career to whom I am thankful; but I am constantly humbled by my opportunity to learn from Jeff, an individual who has an incredible amount of knowledge and willingness to pass along his insights to the next generation of insurance professionals like myself.

Update from The North Carolina Captive Insurance Association Conference

The Capterra Team attends numerous conferences every year. One of our favorites is the North Carolina Captive Insurance Association (NCCIA) Conference, which was held this year from May 7th-10th.  Afterward, Jeff and I sat down to debrief and share our thoughts on the Conference

NCCIA is a time when captive managers, partners, service providers, and owners come together to support North Carolina as a domicile, learn from other industry professionals, and network with each other to brainstorm solutions for their clients.

The conference begins with an opening ceremony dedicated to highlighting successes and providing updates from the North Carolina Department of Insurance (NCDOI) on the current economic market and how it may be affecting captive performance.

North Carolina is the 6th largest domicile in the world and was launched in 2013

During this opening ceremony, we were fascinated to learn that North Carolina:

  • Currently has $1.3 billion dollars of written premium between all licensed North Carolina captives.
  • Has quickly grown to become the 4th largest domicile in the United States and 6th largest in the world.

North Carolina first implemented legislation in October 2013 to become a captive domicile and launched its first conference in 2014; the growth North Carolina has experienced in such a short period of time is a testament to all the hard work of the NCDOI.









Founder Sandra Fenters with Mike Causey, the North Carolina Commissioner of Insurance.

Partner Bill Eleamos Participates on Panel

Our very own VP of Finance, Bill Eleamos, presented as a member of a panel on Navigating Conflict Between Owners and Managers.

A few key takeaways from the panel on how to avoid conflict with captive owners and managers and run an efficient captive insurance company were as follows:

  • Implement claims procedures with each captive insurance company at inception. Adhere to procedures for reporting, managing, and reimbursement of claims.
  • Owners want certainty. Provide consistent and clear communication between the captive manager, insurance regulator, insurer, and insured.  Eliminate unknowns/surprises.
  • Conduct effective board meetings

The panel also included Bill Eleamos, Alex Webb, Managing Partner of Webb & Morton, PLLC, Debbie Walker, Consultant, and Andrew Rennick, Partner at Womble Bond Dickinson (US) LLP.

Insights from Other Sessions

A few of the additional sessions that Jeff and I found valuable included:

  • The Medical Impact of COVID-19 and Captive Risk Management
    • There has been a 70% increase in interest to insure Gap or Medical Stop Loss Insurance in captives due to catastrophic claims, drugs, gene therapy, claim frequency, and size
    • 51% of people reported increased captive utilization due to the impact of COVID-19
  • Tailor-Made Insurance
    • Parametric Insurance is beginning to be used for some weather-related risks, but could have other purposes such as strike, mechanical failure, or civil authority risks
    • The claims process can be clearer and more streamlined
  • When is an RRG the “Right” Solution
    • Risk Retention Groups (RRGs) have proven to be great solution for the following groups: Medical Professional Liability (Physicians, Senior Care), Specialty Auto (Trucking, Livery), and Specialty General Liability (Contractors, Manufacturers)
    • RRGs are great if the following factors are present:
      • Reinsurance
      • Sufficient Levels of Capitalization
      • Strong, Core Group of Participants
      • Premium Growth/Critical Mass
      • Ability to Maintain Lower Expense Ratios
      • Strong Relationships with Regulatory Agencies
    • Update on Federal and State Tax Issues and Significance of Exposure Units in Analyzing Risk Distribution
      • New regulations will be an “upgrade” from Notice 2016-66 and make it obsolete
      • New regulations break microcaptives into two categories: “listed transaction” or “transaction of interest”
      • The panel believes there are strategic reasons to comment and testify including make the industry’s positions known, and to question the validity of the proposed regulations
      • The panel did not recommend submitting a unified, collective opinion piece on behalf of the industry, but did recommend that comments and feedback be sent from various, separate entities with varying opinions and commentary.
      • June 12, 2023 is the deadline to submit electronic or written comments on the proposed regulations

In attendance at this year’s Conference, we saw many captive owners. I was thoroughly impressed by captive owners who were eager to learn more about their captive and the captive industry as a whole. We would like to encourage all our clients, especially those domiciled in North Carolina, to consider joining us next year for the NCCIA 2024 conference in Ashville, NC.

4 Takeaways from WRCIC

By Bill Eleamos

I am just back from the Western Region Captive Insurance Conference.  It was great to be in person with many of my colleagues. And, yes, the Western heatwave got us in Salt Lake City. Daytime temperatures hit 105.

As we expand our client base in the West, the Capterra Risk team felt it was important to invest time in the region – learning about the latest issues and trends there.

I want to briefly update you on 4 insights I gained while at the conference. Capterra already addresses these areas of interest, but it is always good to analyze our best practices to determine if we can improve.

1. The commercial insurance market continues to harden, leading to more captive formations.

Many businesses are experiencing the following in their commercial insurance policies:

    • Rates increasing by 20% – 30%
    • Deductible increases
    • Retraction or decrease in limits
    • Added exclusions to coverages

2. As captive formations and programs become more popular, the industry is seeing a growing interest in several lines of coverage in 2021.

    1. Medical Reimbursement/Stop Loss
    2. Cyber
    3. Workers Comp
    4. Property
    5. D&O
    6. Business interruption
    7. Auto liability

Captive policies fill gaps in the insured Company’s traditional risk management program providing coverage where there otherwise was none or very limited coverage.  Captive Owners and Managers may want to consider moving coverages to their captive, leverage their captive when negotiating their traditional renewals, and request that their traditional insurance carrier and/or broker work even closer with their captive management team.

We should discuss whether you have risk in any of these areas that are not currently insured by your existing policies. If so, your captive may be an appropriate tool to insure for these exposures.

3. As always, there were many discussions focusing on best practices for captive owners and managers. They included confirming:

    • The captive is adequately capitalized.
    • The captive has the ability to pay claims when they arise.
    • The captive is a licensed and regulated insurance company in the state where it operates.
    • The captive utilizes reliable underwriters and actuaries to price premiums with an arm’s length approach.
    • The captive pays premiums in a timely manner.
    • The captive properly documents all activity including but not limited to claims meetings, board meetings, business plan changes, claims procedures, etc.
    • The captive’s insurance policies are working cohesively with the insured company’s commercial insurance policies.

At Capterra Risk Solutions, we focus on these practices intently.

4. We discussed the implementation and growth of CICA’s NEXTGen Program which is a group of young & new professionals in the captive insurance industry.

The program will concentrate on the career development and networking opportunities for young professionals interested in the captive insurance industry. We hope to get more involved.

As a company interested in investing in our Industry, Sandra Fenters is involved in Advocacy efforts on Capitol Hill and Mentorship Programs to aide new captive professionals in their professional growth and career advancement.

We hope to see you in-person soon

As our country continues to remove restrictions after the COVID-19 pandemic, the Capterra team has been traveling more and more.  We have made an effort to visit clients, service providers, and colleagues.

In an ongoing attempt to stay abreast of the latest developments in the insurance world, we will be attending the North Carolina Captive Insurance Association Conference in late August/early September and SIIA’s National Conference in Austin in October.

See you then!

Advocacy: Your Role in Shaping the Future of Captives

It is scary to learn that the majority of policy makers do not know what Captive Insurance is and the ways a Captive can aid businesses.  Do you ever wonder if there is anything you can do to stop the propagation of bad information about Captives pushed by critics?

SIIA Has Led Advocacy Efforts for Captives

Much has changed in the world of captives taking the 831(b) election since their formation in 1986. The Self-Insurance Institute of America, Inc. (SIIA) plays a major role in shaping the direction of the industry and prioritizes:

  • Educating Congress Members
  • Preventing bad policy decisions and destructive legislation and regulation
  • Encouraging open and clear dialogue about Captives

SIIA is focused on reducing onerous requirements such as those imposed by Notice 2016-66 and the receipt of IRS letter 6336 and has taken the following steps to address concerns:

  • SIIA has been in conversations with the White House
  • SIIA sent a letter to the IRS and Treasury about burdensome, costly, and ill-timed requests on March 30, 2020. Here is a link to the full letter.

The advocacy efforts of SIIA has led to the following accomplishments:

  • The IRS removed Captives taking the 831(b) election from their “Dirty Dozen” list (a compilation by the IRS of the programs that represent “The worst of the worst tax scams”). 2020 is the first time since 2014 that Captives were not included on the list.
  • 23 parties including SIIA filed an Amicus Brief recently in reference to the case before the US Supreme Court: CIC Services LLC v. IRS.  For more details, click here.

What You Can Do To Help

In an attempt to build upon recent successes, SIIA is asking Captive Owners to consider joining its Advocacy efforts by contacting Ryan Work to setup meetings with Members of Congress to share their stories.  Congress Members want to hear from their constituents, and who is better to educate government officials than those that are utilizing Captives for real risk mitigation in their Companies.  The IRS was under the assumption that many coverages written by Captives insure for risks that are not real; yet here we are in the middle of a pandemic and one of the only coverages responding are Contingent Business Interruption policies issued by Captives.

As Ryan stated during the webinar,

“Doing nothing invites risk and doing nothing in the Captive industry creates issues.  If we do not create the dialog, those in opposition to Captives will fill that silence, which could result in restrictions or worse.  Those in support of Captives must speak out to prevent the loudest voice from being the critics.”

Sandra L. Fenters is a member of Ryan Work’s SIIA Advocacy Committee for the last 3 years.  She has met with many legislators in an attempt to educate them about and advocate for Captives.  It is something Sandra and Capterra feel is necessary and important.  We would love to build our advocacy team with a focus on education so that Congress Members understand the need for Captives and do not simply base their viewpoint solely on what is portrayed by critics.

Although the goal is to educate and solve this problem, the reality is that this is an ongoing effort due to the turnover in Congress.  Alone, SIIA cannot reach out to all 450 Members of Congress, but with the help of Captive Owners, we can together build a narrative and reach many more.

If you are interested in telling your Company’s story and helping to educate Members of Congress on the need for Captives, please let us know and we will put you in contact with Ryan Work so that he can aid in setting up a meeting with a Member of Congress or a staffer.

Thank you for considering playing a key role in the future of Captives by aiding with Advocacy efforts.  We hope to work with you in this capacity in the near future.


What Prompted This Communication

The information above was reviewed in a recent webinar Capterra Risk Solutions, LLC participated in on Tuesday, July 21, 2020 titled SIIA Captive Owner Engagement & Policy Update presented by Ryan Work the Vice President of Government Relations for the Self-Insurance Institute of America, Inc. (SIIA).

In summary, the webinar covered the background of SIIA, their goals, approach, and recent activity, a timeline of the past 5 years as it relates to Captives, and an ask for Captive Owners to participate in advocacy and education efforts to engage Members of Congress.   If you would like to view the webinar, please let us know and we will obtain approval to share a link to the recording with you.

Delaware Captive Insurance Association 2014 Spring Forum Highlights

We attended the Delaware Captive Insurance Association Forum on May 12th and 13th in Wilmington, DE.  The event was well attended with 79 participants from many disciplines all working in the captive space: attorneys, actuaries, CPA’s, captive managers, and Delaware regulators including the Insurance Commissioner, Karen Weldin.  The forum offered a great opportunity to meet with several key players working with captives domiciled in Delaware.

Sandra was asked to present Tuesday morning and conducted a lively session regarding policy construction with Andrew Rennick, Esquire of Gordon, Fournaris & Mammarella, P.A.  We had an interesting session with Steve Kinion, the Delaware Director, Bureau of Captive and Financial Insurance Products, where he shared his views on the National Association of Insurance Commissioners’ (NAIC) move to change the definition of multi-state insurers which may adversely affect captives.  Steve also went over his proposed changes to Delaware regulations primarily affecting series captives, as well as providing new loan guidelines for all captives.

One of the participants of note was Chaz Lavelle of Bingham Greenebaum Doll, LLP.  Chaz was the Tax Counsel for two key taxpayer victories in captive insurance cases including the Humana Inc. v. Commissioner which decided the “brother-sister” issue regarding risk sharing and risk distribution.

Great forum and time well spent!

What Doesn’t Belong in Your Small Captive

Last week, we attended (via Webinar) a presentation at the CICA International Conference, held in Arizona, entitled “Best Captive Practices for 831(b)s- Do Them Right or Don’t Do Them At All.

This presentation looked at small captives from the perspective of a captive manager, an actuary, an attorney, and a captive owner.  It was an interesting presentation covering many aspects of captive insurance companies and their structure including best practice guidelines.  While there were many topics worth sharing, one of the initial items discussed was what NOT to place in your small captive (may be appropriate in a larger captive, or a group captive):

  • Primary, working layers of easily accessible commercial coverages like general liability and auto liability;
  • High frequency coverages like workers compensation, auto physical damage; and
  • Long tail or primary coverages seen as inherently “risky” like medical malpractice.

What you are likely to want to place in your small captive are more “traditional,” low frequency risks that potentially have a high severity:

  • Weather related risks: flood, wind;
  • Pollution liability and clean-up; and
  • Excess or Wrap/DIC policies.

You’ll also want to consider including coverage for some more non-traditional risks (but be careful that these are not just “business risks”) including coverage that is not available at all in the traditional insurance market and currently self-insured.

Want to learn more?  Please give us a call, or send us a comment or question!

Pittsburgh Business Times Business for Breakfast 9/12/2013

Capterra Risk Solutions attended a wonderful presentation on September 12, 2013, hosted by Pittsburgh Business Times and the Southpointe Golf Club.  “Social Media in 20 Minutes a Day” was presented by Cindy Rack the Social Media Strategist for Social Voice Marketing, LLC. Her mission is to bring sanity to social media. Cindy leads workshops, provides video-based trainings, strategy plans, consulting, and customizations.

To see photos from the program, please visit: http://bizj.us/t7bcr/i/3

For more information on Social Voice Marketing, LLC and Cindy Rack visit: http://socialvoicemarketing.com/