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Corporate Regulation and Governance in Captives

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Delve into captive insurance governance matters including board attributes, board structure, and board accountability. With 30 years of insurance experience from the auditing, regulatory, and management side, Derick White, managing director of corporate governance and regulation for Strategic Risk Solutions, offers key insights into captive board governance.

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Captive Insurers Need Independent, Experienced Directors, Article Says

Board of Directors
April 26, 2016

An article written by Andrew J. Barile that appeared recently in Risk Management Monitor, the official blog of Risk Management magazine, explains the increased need for captive insurers to have board members who are independent and experienced in insurance.

"The current climate for captive insurers is gravitating toward encouraging captives—including single-­parent, association and agent-owned—to appoint experienced, independent directors to their boards," Mr. Barile states in his April 20, 2016, article, titled "Captive Growth Increases Need for Insurance-Experienced Board."

He reminds readers that regulators, such as the National Association of Insurance Commissioners (NAIC), and rating agencies favor the appointment of independent directors. However, Mr. Barile's article does not address the parochialism behind state regulators' and state legislators' failure to adopt regulations or legislation repealing the requirement for resident directors. One of the reader comments at the end of the article points out that, currently, many resident directors are not independent.

Mr. Barile, who is founder of Andrew Barile Consulting Corporation Inc. and has extensive experience in the formation and implementation of over 300 captives, notes in his article that "[w]hat is often overlooked is the value-added experience independents offer."

The article provides an excellent and comprehensive listing of the services normally expected of experienced directors and the types of issues they are asked to vote on. The article is important for all captive board members to read. 

RIMS—the risk management society—publishes both Risk Management Monitor and Risk Management magazine.

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