Captive.com logo

Captive Insurance News

Free Captive Wire Report

Tax Considerations for Captive Insurers

A FREE 16-page special report courtesy of Captive.com

Dig deep into important issues and trends in captive insurance. Download this FREE special report featuring practical knowledge and insights from nine respected captive insurance thought leaders!

Show Me My Free Report

Captive Insurance Boards Need Education To Keep Pace

Board of Directors
March 14, 2016

Recent news reports about the Wounded Warrior Project, a charity for veterans, may raise the question of the board of directors role and responsibility in any organization when allegations of excesses occur. If the allegations are true, the senior management team is certainly responsible, but the board of directors also has a fiduciary responsibility to monitor what transpires.

All boards, from large corporate entities to small nonprofits, have to focus on risk management, as pointed out in a recent Risk & Insurance article by Joanna Makomaski. There is an increased need for risk management training, especially at the board level, Ms. Makomaski's March 1, 2016, article, titled "Risk School for Boards," indicates.

"Most boards consist of great people, who want to do a great job," the article states. "But there is a problem with giving this oversight responsibility to our boards, especially if they are ill-equipped."

This comment holds true within the captive insurance industry as well. Current market conditions have played a role in increasing the need for boards to understand and proactively deal with the risks embedded within their captives. Soft market pricing, low investment yields, new and more complex products, and escalating claims costs are increasing the risks to the captive. The question is whether the education of the board has kept pace.

The preponderance of board meeting time is spent on fiduciary items, which entail looking back in time; for example, reviewing financial statements, investment reports, and claims. Does your board set aside any time during the year for training and education? Are you staying current on developments within all facets of the captive industry? If not, why not?

Captive Insurance Company Reports
Follow Captive.com on Twitter

Twitter Feed