Bickmore Risk Services and Consulting

What are the steps involved in a captive formation and approval process?

BRS provides guidance, assistance, and support to help private employer groups complete all steps necessary for approval. These include:

• Feasibility study — The captive feasibility study includes an analysis of the advantages and disadvantages, both financial and operational, of forming a captive insurance company. The feasibility study will include an actuarial study, pro-forma balance sheets, and income statements, an analysis of which type of captive would best serve the needs of the group and which domicile would be most appropriate.
• Business plan — Working with member representatives, BRS helps develop the management structure, rating and billing plans, and underwriting requirements. Groups must also select providers for program administration, accounting, actuarial, safety and loss control, claims adjusting, investment management, excess insurance brokerage, and others. A laundry list of additional action items includes preparing governing documents, coverage documents, an investment policy, and forms required by individual states.
• State filing — Shortly after the feasibility study is completed, BRS meets with the domicile of choice to outline the potential captives business plan. Any requested changes to the plan will be brought back to the group for action. BRS then begins the process of finalizing the business plan and legal documents for submission to individual states. BRS then attends the final review meeting with the state and completes any final changes to the documents.

Most Captive services are available through BRS, while others, including brokerage, investment management, and claims adjusting, can be obtained from outside providers. Extensive experience working with various professionals and service providers allows BRS to make informed recommendations and ensure that members find knowledgeable and dependable providers.

How do you operate a captive?

Once a group earns the state's approval to operate, BRS can serve as its administrator, continuing to provide guidance as the captive begins operation. At present, BRS acts as administrator for 19 public agency and private insurance programs. Each year, BRS verifies the soundness of the captive group by encouraging independent claims and financial audits of the group and its individual members, and by performing an actuarial study to review the program's overall funding and future rates.

• Financial management — Including preparing budgets, providing accounting and actuarial analyses, calculating equity and dividends, and overseeing investments
• Administration and management - Including monitoring contractor performance, overseeing claims and litigation actions, and assuring statutory compliance
• Marketing support — Including communicating to existing and potential members via onsite meetings, convention demonstrations, and group website maintenance
• Risk control and safety — Including helping reduce the potential for adverse loss experience by managing the captives loss control program