What Should a Captive Insurer's Claims Handling Procedures Discuss?


Captive Operations & Services | Lynn Sheils | General Counsel | EWI Re, Inc.


A captive insurer's claims handling procedures should discuss all stages that are in the life cycle of a claim, according to Lynn Sheils, general counsel of EWI Reinsurance. The life cycle stages include how notice from parent to captive and notice by captive to excess insurers and reinsurers will be handled, investigation standards, coverage evaluation, reserving approach, and claim closure philosophy.

The claims handling procedures should include the protocol for educating the parent company when noticing claims to the captive. The captive should also have procedures on when it notifies excess insurers and reinsurers of claims. The investigation should be the standard investigation of a traditional insurer. Likewise, in evaluating coverage, the captive should act like a traditional insurance company. Reserves need to be set early, and they need to be accurate. Finally, the captive owner's (parent) handling of claims philosophy should be reflected in how claims are brought to closure.