Early Negotiation with Insurers is Key to Captive Success: Experts

RANCHO MIRAGE, Calif. — Risk managers with proprietary programs need to negotiate early with insurance markets and work with their sponsor partners, experts say.

“You can never have enough information,” said Jennifer Guidry, vice president of business development and marketing-alternative markets in Hartford, Connecticut, at the Great American Insurance Group during a panel session Monday at the Captive Insurance Companies Association 2023 International Conference.

Captive managers need to negotiate early and focus on preparing and understanding the structure of their insurance partners, Ms Guidry said.

Working with others to understand how they are structured is “an important piece of important information” because in this negotiation process “it will affect how they view pricing, fees and their cost structure, which of course is important to you ,” She said.

As captive managers assemble their captive, coverage and advisors, it’s also important to ask questions to determine if insurance partners have the product documentation they need, Ms. Guidry said.

Great conversations start with collaboration, said Adriana Scherzinger, vice president, head of captive sales and execution, US national accounts and middle market, Chicago North America at Zurich North America.

It’s important that insurers consider the limits, claims history and risk mitigation factors that the captive and customer have implemented, along with any changes in the regulatory environment, she said.

“We look at financial information, the financial risks of the parent company and the financial risks of the captive. This is an integral part of credit risk decisions,” said Ms. Scherzinger.

Timing is “a key pillar” of negotiations in the captive space, said David Raymond, vice president of specialty group captives at The Travelers Cos. Inc. of Hartford, Connecticut.

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Negotiating with trapped customers is more like a family than a business relationship, he said.

“You can negotiate with your spouse and you can leave the room and not be satisfied with that negotiation, but you are expected to come back into the room at some point,” Mr. Raymond said.

“This thought process of how I get into this conversation really drives the rest of the conversation. If you don’t prepare for it, you will be woefully underrepresented in your own position,” he said.

Trust and active listening are also important to ensure customers are getting what they need, he said.

It’s important to see insurers as partners working with you, Ms Guidry said.

“I’ve had times when different captive owners would come in and have a conceptual idea that they wanted to put together. We were able to work with them as partners by bringing expertise,” she said.

Building partnerships with insurers, their fronting arrangements, and their brokerage team all help risk managers do a good job with their captives and for their organization, said Theresa Severson, vice president of insurance and risk in Aurora, Illinois. at Kite Realty Group, who moderated the session.