Where To Begin with Retaining a Captive Manager

Businesspeople talking around a conference table

June 24, 2024 |

Businesspeople talking around a conference table

Where To Begin

In some circumstances, the retention of a captive manager may be predetermined. This can happen in several ways. Frequently, the initial idea of a new captive insurer begins as a discussion among interested parties who use the same insurance broker. Major brokerage firms often have internal captive management resources. Here, the broker may suggest to the interested parties that it makes sense to keep all services under one umbrella, leading the parties to agree on retaining the brokerage's captive management subsidiary.

If a broker/agent lacks internal capacity, there may be an existing relationship with an independent captive management firm. The broker/agent may recommend retaining this firm initially to conduct a captive feasibility study. If the board is comfortable with the initial work, it often naturally progresses to retaining the captive manager.

None of these circumstances are unique, and this is frequently how things occur. However, boards should not hesitate to interview other candidates for the role of captive manager, including both the brokerage subsidiary and the independent captive manager.

Steps for Boards To Follow

Many times, the board will already have a domicile in mind for the captive insurer. Most domiciles maintain a listing of approved captive managers allowed to operate within their jurisdiction. A simple phone call to the head of the captive insurance division in the domicile of choice will provide the names of these companies. From there, the board can conduct online due diligence to narrow down the list of potential managers to those they will ultimately send a request for proposal (RFP).

Designing a well-thought-out RFP when soliciting a captive manager will facilitate the process and ensure a successful partnership. While there is no need to reinvent the wheel, the board should avoid merely copying and pasting information into a preexisting RFP obtained elsewhere. The board should seek to hire a professional firm with which it hopes to build a long-term relationship. As such, significant effort and thought should be put into the document sent to potential respondents. The better the board can articulate what it is seeking, the more likely it will get serious responses in return.

Necessary Parts of an RFP

  1. Cover Letter: This document should provide sufficient information for the reader to quickly determine if they want to respond. It is a common courtesy and sets forth an executive summary of the RFP. The letter should contain the contact information of the authorized party, a brief synopsis of why the captive is being formed, the intended lines of business, a timeline for the submission process, and the terms and conditions that will bind the bidders.
  2. RFP Document:
    • Background Section: Explain why the captive is being formed and by whom.
    • Scope of Services Section: This is the core of the RFP. Spend 80 percent of the development time on this section. Clearly describe what the board would like the captive manager to do or provide.
    • General Terms and Conditions Section: Includes language from the board's legal counsel on contract terms, cancellation provisions, payment and billing information, confidentiality requirements, ownership of the work product, pricing of additional services, and billing information.
    • Response Structure Section: Outline the requirements for the RFP to be considered complete, including length, allowances for appendixes or attachments, delivery date, and methodology.
  3. RFP Evaluation Matrix: Let candidates know how they will be graded and that the board has thought about the selection process. This creates objective criteria that can be beneficial if the process becomes contentious.
  4. Responses to Questions: No matter how well an RFP is designed, prospective bidders will have questions. Address the time frame for questions, the contact information for the individual assigned to respond, and whether questions and answers will be shared with all potential bidders.


While following this recipe does not guarantee success, it can greatly increase a board's chances of finding the right captive manager. By thoroughly preparing and clearly communicating expectations, the board can foster a productive and long-term partnership with a professional captive management firm.

June 24, 2024