View from the Captive Cockpit Needs A Technology Parachute


View from the Captive Cockpit Needs A Technology Parachute

In a recent IRMI blog post (“A View from the Cockpit: Systems and Controls of Good Captive Managers”) the team at Atlas Insurance Management Limited compared the successful management of a captive insurance company to flying a plane.

“It’s a whole lot less intimidating once one understands the controls and systems that need to be in place along with how to operate them,” said the authors, noting that this requires administration of several functional business areas, including financial accounting, corporate governance, underwriting and risk management, regulatory reporting, and even vendor oversight.

The discussion, which included effective onboarding, creation of a handbook, ongoing captive review and monitoring and hiring a professional services team, all represent great first steps.  But the authors failed to mention the importance of having the best possible technology platform to facilitate and maintain this complicated endeavor.

This is especially true in light of all the difficult decisions that need to be made around the establishment of a captive, because whether management of the captive takes place internally or via a services team, often times the newly formed organization already operated in some form or fashion in the past as an independent carrier or other business, and is now moving to a captive environment.  In these instances, there already are technology systems in place to manage incoming business, even if they are obsolete or require updating.

So, the analogy to flying a plane applies to acquiring or updating technology, too, except in this example, repairs and/or upgrades are being made to a plane that is already in flight. In other words, understanding the controls and systems is one thing, but implementing and/or upgrading the controls and systems’ technology must take place while remaining fully engaged in business as usual–without missing a policy issuance, a billing cycle, a claims cycle or an audit.

And the technology must be designed to instantly enable captive managers to achieve efficiency, transparency and compliance—all at once.  This is where core cloud software comes in as a valuable solution to what may be a host of disparate business applications that have previously operated in silo mode.

By implementing a cloud-based core insurance management solution that supports captive operations across the entire policy lifecycle, all data is controlled, available and safe from compromise, meaning data encryption (in transit and at rest) is employed to ensure comprehensive compliance and quality assurance.

This enables captive managers to access and process data collaboratively, respond faster to customer and auditor demands, and operate in a secure environment.  As one captive manager told me, there was less stress with being acquired because his team had put a technology plan in place that would accommodate almost any business scenario.

“During the acquisition and subsequent merger of technology systems, we ended up choosing a cloud-based platform that allowed us to integrate our data, and then leverage the flexibility of a spreadsheet program while accessing the power of a now more secure database, which meant we could perform sophisticated risk analysis based on real-time information, all while continuing to meet the needs of our policyholders. This was much more than we expected.”

When captive managers end up repairing and/or replacing systems while “flying the plane,” there will probably be at least a little turbulence, but with a plan in place that ensures seamless integration of cloud-based software that deftly manages all aspects of the insurance operation, it frees up management to focus on other important parts of what will now be a growing enterprise.  No parachute needed.