Key Attributes and Duties of Captive Insurance Managers

For most captive insurance owners—other than large corporations with substantial internal resources—selecting a qualified captive manager is one of the most critical decisions they will make. The captive manager does far more than keep the books: They are vital to ensuring that the captive operates effectively, complies with captive domicile regulations, and protects the interests of all stakeholders.

In many domiciles, particularly offshore jurisdictions, regulators require or strongly encourage captive owners to retain a professional management firm. This is not simply to ease the captive owner's burden; it reflects the reality that regulators rely on trusted managers to help maintain oversight without creating unnecessary bureaucracy. A skilled manager helps balance the captive's operational autonomy with regulatory compliance, ensuring that all parties—the owner, the captive itself, and the regulator—are aligned in pursuit of a successful, well-run captive.

Core Responsibilities of a Captive Manager

Captive managers today are expected to perform at a high level of professionalism and independence. Their duties typically include the following.

• Maintaining accurate financial and operational records
• Serving as the primary point of contact with domiciliary regulators
• Ensuring compliance with all applicable domicile laws and regulations
• Developing business plans, pro forma financial statements, and board materials
• Issuing policies and endorsements, and managing billing and premium collections
• Keeping records of excess and reinsurance contracts, and reviewing them to safeguard the captive's interests
• Managing cash flow, including oversight of checkbooks and accounts (often through restricted or zero-balance accounts)
• Coordinating meetings and communications among the captive's board, owners, and service providers

Importantly, the manager often acts as the guardian of the captive's integrity—ensuring that decisions made by owners or others do not inadvertently harm the captive's standing, solvency, or risk-sharing partnerships.

Attributes To Look For

Ethical Behavior

The manager must be committed to ethical conduct, aligning with the captive's purpose and goals. Captive owners should ask whether the manager has a written code of ethics, how it enforces this code, and whether it has acted on it—such as by terminating a client over ethical concerns. Given that the manager serves both the owner's interests and the regulator's expectations, integrity is nonnegotiable.

Professional Competence

Competence begins with the manager's team. Look for professionals with credentials in accounting, risk management, actuarial science, law, or finance. Recognized designations—such as ARM, CPCU, CRM, CPA, JD, FCAS, ACAS, or ICCIE—demonstrate expertise. The manager should support ongoing education and have rigorous hiring and training practices.

Strong Communication Skills

The captive manager coordinates between the owner, regulators, and other service providers. Ask how the firm ensures clear communication, whether through written reports, virtual meetings, or in-person sessions. Does it document key discussions and decisions? Have prior communication challenges been addressed constructively?

Transparency

Owners should understand the captive manager's ownership structure and potential conflicts of interest. Whether independent or affiliated with another firm, the manager should offer clear fee structures, disclose affiliations, and allow the captive freedom in selecting other service providers. Transparency also extends to financial controls: Managers should share results of SOC 1 Type 2 or SOC 2 audits (under SSAE 18 standards) and outline controls over the captive's funds.

Evidence of Success

A good captive manager demonstrates a history of effective, compliant operations. Ask about its longevity, number of captives managed, references from regulators and peers, and its ability to adapt to changes in regulatory or market conditions. A manager should provide specific examples of creativity and value-added service.

The Duty of the Manager

While the owner selects the manager, the manager's duty is ultimately to protect the captive insurer's best interests. This includes safeguarding assets, ensuring sufficient liquidity to meet claims, and intervening when decisions threaten the captive's integrity or compliance. If necessary, the manager must alert the regulator to material concerns and help resolve issues, often through additional capital injections or corrective measures.

The manager also plays a vital role in relationship management—fostering trust with regulators, reinsurers, and other partners. A good manager stays attuned to regulatory expectations, proposed changes, and the domicile's legislative climate. This ensures that no owner faces surprises during critical meetings or regulatory reviews.

Final Thoughts

A qualified, ethical, and communicative captive manager is indispensable to the success of a captive insurance company. While their services may represent a meaningful operational cost, they help ensure that the captive functions smoothly, fulfills its regulatory obligations, and protects the interests of all stakeholders. In today's complex risk environment, that partnership is more essential than ever.