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Book Review:
Captive Practices and Procedures
by Kathryn A. Westover

Reviewed by John Salisbury, CPCU, Are and ARM*
President Captive.com, llc

Captive Practices and Procedures

Captive Practices and Procedures is the latest gem written by author Kathryn Westover. This book is highly recommended for those considering the formation of a captive, captive owners or participants, those who have been elected to serve on a captive board of directors, students, and others seeking a concise overview of forming, structuring and operating a captive. The book is intended for those that have little or no knowledge about the operations of a captive. It also is a great refresher and resource for those with captive governance, management and/or consulting experience.

The author, Kate Westover, shares a wealth of knowledge that she has gained over more than 20 years as a captive manager and consultant. The text is further enriched by the tax expertise of Tom Jones, Esq. of McDermott, Will & Emery.

Part One of the book is devoted to structuring a captive insurance program. The five chapters of this section focus on how to build a captive to last. These “how to” chapters are especially important because captives are intended to provide a long-term risk financing benefit.

The chapters in Part One include:

• Feasibility Studies
• Ownership and Organizational Choices
• Domicile Selection
• Writing a Business Plan
• Formation

All of the chapters in this section provide excellent guidelines, suggestions, and “how to’s” for any and all of those involved in forming a captive with a strong foundation. This section is one that captive experts at www.captive.com will suggest as a resource to answer many of the questions we receive though our “Ask the Expert” service.

“Understanding Your Captive Insurance Company Operations” is the title of Part Two of the 200 plus page book. The section is particularly useful for members of captive Boards of Directors. Additionally, it provides training for captive managers or in-house staff of captive organizations. The section provides a “big picture” of the overall operations of a captive.

The chapters in Part Two include:

• Developing Insurance Savvy
• Developing Operation Savvy
• Developing Financial Savvy
• Building the Captive Management Team
• Operating Procedures

The only chapter I find missing from Part Two of what is an otherwise excellent text, would be a chapter called Creating and Operating a Captive Service Program where the outcome is “Good Management = Good Risk Management.” My 40 plus years experience with group self-insurance programs and group captives suggests that a captive service program is a very important source of the long-term risk financing benefit of a captive.

Captive Practices and Procedures also includes six valuable appendices:

• Sample Board Policies
• Financial Ratios
• Maintenance of Books and Records in the Captive Domicile
• Sample Reports and Forms
• Captive Industry Resources
• Glossary of Captive Terms

This book is a highly-recommended read -- one which is sure to become dog-eared from use in either the formation or operation of either your “captive-to-be” or your current captive’s governance or operations.

*John Salisbury has more that 40 years of experience in developing and managing group captives. He currently serves as the President and Chief Executive Officer of Government Entities Mutual, Inc., a reinsurance captive. John identified the need for a website that served the captive insurance industry in 1995 and is a partner in Captive.com. He is currently interested in putting his expertise and experience to work as an independent director of a captive board and can be contacted at john.salisbury@captive.com or calling 603-731-0638.

General shipping guidelines: For domestic shipments, please allow 2 weeks for delivery. Should you have questions about your order, you may reply to the e-mail that confirms your order or call IRMI at 800-827-4242.

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