Captive Insurance Examinations: What to Expect and How to Prepare

At the 2026 Captive Insurance Companies Association (CICA) International Conference in Palm Desert, a session titled "Let's Take a Look Under the Hood—Captive Examinations (Intermediate: 201)" examined how regulatory examinations are conducted, what regulators are looking for, and how captive owners and service providers can prepare for the process.

The panel brought together perspectives from a regulator, adviser, accountant, and captive owner, including Dan Petterson of the Vermont Department of Financial Regulation, Jay Curtis of Aon, Nathan Robnett of Aprio, and Josh Bicknell of Revantage.

The discussion focused on how examinations fit within broader regulatory oversight, how practices differ across domiciles, and what separates a smooth examination from a difficult one.

The panel began by clarifying that examinations are only one part of the regulatory process. While some domiciles conduct examinations on a regular cycle, others rely more heavily on ongoing analysis, financial filings, and business plan reviews. As Mr. Robnett noted, "Examinations don't happen every year," and in some jurisdictions may only occur periodically or when specific issues arise.

Mr. Petterson explained that examination approaches are shaped by each domicile's regulatory philosophy and risk tolerance. In Vermont, the approach has evolved over decades into a risk-focused model, where examinations are conducted on a regular cycle and used as a tool to better understand how captives operate. He noted that examinations provide an opportunity to "get to know the companies, to get to know their business plans, to get to know what they're doing," rather than serving solely as a compliance exercise.

At the same time, the panel made clear that there is no single approach across domiciles. Examples shared during the session highlighted a range of practices, from 5-year examination cycles to risk-based models where higher-risk captives are reviewed more frequently. In some cases, examinations may be waived or deferred if a captive demonstrates strong financial performance, clean audits, and compliance with its approved business plan.

Within that broader framework, the discussion turned to targeted examinations, which are used more selectively. Mr. Petterson described these as focused reviews designed to address specific issues, such as reserving practices, underwriting concerns, or complex business plan changes. While not used frequently, they provide regulators with a way to take a closer look at areas that require additional attention without waiting for the next full examination cycle.

From an advisory perspective, examinations are often misunderstood by captive owners. Mr. Curtis noted that clients may initially view the process as regulatory scrutiny, but in practice it functions more as validation. He explained that examinations help confirm that the captive is operating in line with its approved business plan, similar to how an audit validates financial reporting.

This perspective was reinforced by Mr. Bicknell, who described how he prepares internal stakeholders for an upcoming examination. Rather than positioning it as a disruptive or punitive process, he frames it as confirmation that the captive is operating as intended. As he explained, the goal is to demonstrate that the organization is "checking the boxes of why it was we set out to create a captive in the first place."

Preparation, however, is not something that begins just before an examination. Both Mr. Curtis and Mr. Bicknell emphasized that readiness is built over time through consistent processes and documentation. Mr. Curtis noted that preparation should begin at formation and continue through ongoing governance, including regular reporting to the board and maintaining compliance with corporate and regulatory requirements.

Mr. Bicknell described a similar approach, explaining that he evaluates decisions in real time with the expectation that they will eventually be reviewed. He noted that he often considers how a particular action would be explained during an examination, ensuring that there are clear documentation and rationale behind each decision.

The panel also addressed what differentiates a smooth examination from a more difficult one. Mr. Petterson emphasized that most examinations are completed without significant issues, and that challenges typically arise from breakdowns in communication. He noted that poor or delayed communication can lead to misunderstandings, extended timelines, and unexpected findings.

Another factor is the consistency and quality of documentation. Minor compliance issues, such as missing filings or incomplete documentation, are common and can usually be resolved through discussion. However, when these issues occur repeatedly, they may indicate broader weaknesses in internal controls or processes, prompting regulators to take a closer look.

Mr. Petterson also described the difference between routine regulatory analysis and a full examination using a practical analogy. He compared ongoing regulatory review to a basic inspection, where filings and financial metrics are reviewed at a high level. In contrast, the examination process is where regulators "look under the hood" to evaluate the underlying processes and controls that support those results.

This distinction highlights why preparation must extend beyond financial reporting. Examinations focus not only on outcomes but also on how those outcomes are achieved, including internal controls, governance practices, and operational processes.

The role of service providers was another key theme. Mr. Curtis emphasized that experienced and coordinated service providers are critical to a smooth examination process. This includes captive managers, auditors, legal counsel, and actuaries, all of whom contribute to maintaining compliance and supporting documentation over time.

He also noted that regulatory expectations are closely tied to the captive's business plan. One of the most consistent issues across domiciles is whether changes to the program have been properly communicated and approved. Failing to notify regulators of material changes can create issues during an examination, particularly if those changes affect the captive's risk profile or financial position.

The discussion then moved to a case study presented by Mr. Bicknell, illustrating how complexity can affect the examination process. His organization operates a sponsored captive structure with multiple cells, different fronting partners, and a range of service providers. This level of complexity requires coordination across multiple entities, agreements, and jurisdictions.

He noted that as complexity increases, so does the scope of the examination. In his case, the structure effectively results in multiple examinations, each requiring its own set of documentation and support. Managing this process requires significant coordination, including regular communication with service providers and internal teams to ensure that all materials are complete and aligned.

Preparation in this context involves demonstrating operational readiness, including having policies, agreements, and documentation in place, as well as clearly showing how the captive fits within the broader risk management strategy of the organization. Transparency was identified as a key factor, with the goal of ensuring that regulators have a clear and consistent view of how the captive operates.

In closing, the panel returned to the importance of communication. Mr. Curtis emphasized that regulators are generally open to dialogue and should be engaged proactively, rather than only during an examination. Addressing issues early and maintaining open communication can help resolve challenges before they become larger concerns.

He also encouraged captive owners not to view examinations as something to avoid but as a normal part of operating within a regulated environment. As he noted, "Anticipate the exam. Don't be afraid of it," emphasizing that the process is intended to support, rather than hinder, the objectives of the captive.