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Captive Insurance Issues and Trends 2018

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Joel Chansky—Captive Insurance Person of Interest

Joel Chansky
October 08, 2018

As part of our ongoing commitment to provide thoughtful commentary concerning issues impacting captives and the broader insurance markets, we spoke with Joel Chansky, chair of the Captive Insurance Companies Association (CICA) Board of Directors. Mr. Chansky is a principal and consulting actuary in the Boston office of Milliman, Inc., specializing in alternative market issues. He is a frequent speaker on the topics of captives, risk retention groups, and alternative risk financing. He is also a faculty member of the International Center for Captive Insurance Education and a former board member of the National Risk Retention Association, the Arizona Captive Insurance Association, and the Captive Insurance Council of the District of Columbia.

Joel, first—congratulations on being elected chair. Every chair whom I have known brings a set of priorities to the position. So, for you, what are the things you'd like to see accomplished during your term?

Thank you for the kind words. As an industry veteran, I have been involved with CICA for several decades. I was excited to have an opportunity to get involved with the CICA board, and it was a natural fit for me. I have admired the leadership CICA has taken in areas of best practices, education, networking, and domicile-neutral advocacy. Being on the board for the past several years has helped to shape my priorities for when I took over as board chair, and my priorities center around growth. First and foremost, I would like to see CICA grow its membership base, in particular, by attracting new captive owner members. Second, I would like to see CICA continue expanding its influence outside of North America. And, third, attracting the next generation to CICA is a priority.

You've been active in the captive arena for a long time. As the industry has become more global, how do you see that impacting the role of CICA?

That's a nice way of saying I'm old! Yes, I've been at it for a long time—my first captive work was way back in 1988 in the state of Vermont. Back then, "global" meant Bermuda and the Cayman Islands, and maybe Guernsey. Now, with captives in other parts of Europe, the Middle East, and the Far East, CICA needs to expand its reach. This means the core roles of CICA of education, best practices, advocacy, collaboration, and networking need to be extended beyond North America. So, arguably, our role isn't changing, but our challenge is to get our message out to more domiciles. And we're doing that by continuing and strengthening our relationship with European Captive Insurance and Reinsurance Owners' Association in Europe and by starting to extend our reach to the Far East.

There continues to be considerable discussion about the need for a strong advocate for captives at both the regulatory and legislative levels. How do you see CICA fulfilling this role?

Advocacy for captives has been a core role of CICA since its inception in the 1970s. We fulfill this role both reactively and proactively. When issues arise in the industry, we typically react by either directly contacting regulators and legislators or by writing position letters and papers. Often this is done in collaboration with representatives from specific captive domiciles. Proactively, CICA organized and coordinates the Captive Association Leadership Council, or CALC, which meets at least annually to discuss issues that are common to all domiciles. Representatives from over 20 domiciles have attended CALC meetings, and many ideas have turned into advocacy items. CICA's domicile-neutral status allows us to make things like CALC happen.

Are there other types of advocacy CICA has been focusing on under your leadership?

Advocacy also takes numerous forms. One challenge the entire captive industry is facing is the retiring of talent and the need to attract and retain the next generation of captive insurance leaders. CICA has taken a very proactive role in advocating for the broad industry in this area. We have taken large strides in expanding our professional development offerings. This includes the launch of our mentorship program, our partnership with Butler University, our continued financial commitment to the International Center for Captive Insurance Education, and the recent launch of our college essay contest. These are all meaningful ways for us to attract and develop that next generation of captive professionals. And CICA was recognized for our efforts in winning the 2018 Industry Advocate Award at the US Captive Review Awards. 

As a corollary to the previous question, how difficult is it for CICA to establish its "one voice," if you will. Obviously, CICA members are a rather diverse group. So how do you distill all of these viewpoints in order to arrive at a consensus?

Good question. At CICA, when a particular segment of the captive industry is under fire, we often start out by discussing the issue and thinking about how to deal with that segment without affecting, or even upsetting, other segments of the captive world. But, in almost all cases, we come back to our core values, and we center the discussion on our best practices philosophy and documents. So when the Organization for Economic Cooperation and Development (OECD) went at multinational captives as tax shelters, we were able to point to captives that follow best practices. Such captives would clearly pass the OECD's sniff tests for being legitimate business units of a multinational. Similarly, as small captives are under siege from the Internal Revenue Service, rather than try to draw lines between small captives and large captives, we have simply returned to our roots: do them right, or don't do them at all. We're in the process of drafting a follow-up document on small captives with a heavy focus on drawing parallels between small captives and other insurance vehiclesboth captive and commercial insurers. And the common thread is best practices. We understand that not everyone may agree with our best practices, but we feel it is important for CICA to look out for the best interests of the broad industry and not necessarily a small niche.

We've been a strong proponent of the need to attract and retain new talent into the captive market. Tell us about the CICA mentoring program. How well is it working? Are there things you'd like to see changed or enhanced?

CICA is also a strong proponent. The mentoring program is less than a year old, and it's about where we thought it would be at this early stage: slow-but-steady growth. So it's a bit too soon to be making material changes. But mentoring is the tip of the iceberg. For example, we have strengthened our ties with colleges and universities. We now have a college professor on our board of directors. And we recently announced our college essay contest, where contestants are competing for cash prizes and a chance to present their findings at CICA's upcoming International Conference next March in my new hometown of Tucson.

When we talked last, we also discussed governance and how it works. How do you view the role of board chair? How do you see the position interacting with the other board members and with Dan Towle, the president?

I've had a lot of time to think about this. I've been on the CICA board for 5 years now, and I've been fortunate to have great mentors by way of the previous 4 board chairs. They all brought different ideas to the table. To me, the ideal CICA board chair gets the most out the CICA president and the other board members. This means facilitating great discussions at board meetings and empowering other board members by implementing their ideas and putting them in charge of committees and task forces that suit their skill sets. I got put in a unique position because I was named vice-chair around the same time that Dan Towle got hired as our president. Recognizing that I would be stepping up to chair the following year, I asked the current chair, Sarah Pacini, what she thought about me working closely with Dan in his first year so that he'd have someone to check in with on a regular basis. Sarah thought this was a great idea, and ever since, Dan and I have had regular, weekly calls to help him get acclimated to his new job. Little did he know that he was acclimating me for my job as chair. And kudos to Sarah, who was simply doing what a good chair does: empowering her other board members. And, at the end of the day, my real goal is to pass on a stronger and better CICA to the next chair.

There have been numerous discussions in many associations concerning how to deliver resources and services to the changing demographics of today's workforce. How has CICA addressed this issue?

The world around us is in a constant state of flux, and the same goes for the captive insurance industry and its workforce. It's our job at CICA to try to keep up with social, technological, and demographical changes and to respond in a way to meet the ever-changing needs of our membership. To do this, we have doubled down on our use of technology and social media. We have also introduced our mentor program, and we have reinstated our Membership Committee with an eye toward both improving services to existing members and to attracting new members. One of the key reasons we hired Dan Towle to be our president was his vision with respect to recognizing and adapting to change. So hiring the right person was another way to address the issue.

Any long-term prognostications you'd like to make concerning the captive industry and CICA?

The captive industry will continue to thrive. It has been, at various times, misunderstood and challenged by legislators and taxing authorities or their representatives. Yet, here we are, with more captives than anyone could have imagined when I started my career. I believe it will continue to thrive and grow. CICA will follow in lockstep and also thrive and grow. I see the need for a domicile-neutral voice for captives growing more important over time. I could see easily see CICA doubling its membership over the next 5 to 10 years.

Any other thoughts you'd like to convey to our readers?

I appreciate the honor and privilege of serving CICA and this great industry. I have learned a tremendous amount from my time in the captive industry and from my time on CICA's board. Giving back to the industry is important, but it also is fulfilling. I have made a number of lifelong friends through CICA, and I am thankful for that. I encourage everyone to get involved. And, finally, I look forward to seeing you in Tucson in 2019!

Thanks for speaking with us, Joel.

Joel Chansky is a principal in the Boston office of Milliman. He joined the firm in 1987. Mr. Chansky's property and casualty insurance experience includes loss reserving, valuation studies, funding studies for captives and self-insureds, rate filing reviews for regulatory authorities, and expert testimony. He also has considerable expertise in the areas of investments and taxes from prior work experience.

Mr. Chansky specializes in alternative market issues. He has assisted with the formation and/or ongoing actuarial needs of many self-insurers, captive insurers, and risk retention groups. He reviews captive and risk retention group applications for several state insurance departments.

In addition to the alternative market, clients have included traditional property and casualty insurers, reinsurers, insurance departments, attorneys general, trade associations, municipal bond insurers, catastrophe bond special-purpose vehicles, underground storage tank insurers, Lloyd's of London, and syndicates on the New York Insurance Exchange.

(Photo of Joel Chansky, above, is courtesy of Milliman.)

Copyright © 2018, International Risk Management Institute, Inc.

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