Selecting the right captive manager for your project is perhaps the most important decision. The range of quality between managers varies greatly. We provide the highest quality services at guaranteed best prices in the industry.
Our captive preliminary assessment provides you an exact proposal of start-up costs and ongoing operational expenses of your captive.
Competing Captive Management Firm Typical Fees and Costs
Click here for information on the typical fees charged by experienced competitor managers.
Impact of Risk Pooling on Fees
If 3rd party risk pooling is a required part of your captive design to follow IRS guidance for qualifying your captive as an insurance company for federal income tax purposes, and/or to reduce risk of high severity losses retained solely by your captive, and thereby reducing volatility of losses in your captive program, we administer a sophisticated contractual risk pooling facility for qualifying enterprise risk micro-captives. Visit Harbor Risk Pool Association website for information on this captive 3rd party risk pool program.
Main Captive Manager Services and Skills Needed
A written engagement agreement controls every captive management relationship. No two managers have identical engagement agreements; in fact they vary widely and it is very unreliable to compare management service price quotes until you get confirmation in writing exactly what services and costs are included and discuss a manager’s operating policies and procedures. The quality of captive management varies greatly between managers, even the top 10 managers in the world, several of which our managing director has worked for.
Here is a list of the main management functions typically needed after formation (formation stage essentially entails the captive design, creation and licensing):
- insurance contract management (invoice, prepare policies, and manage policies)
- captive accounting (creation and maintenance of accounting system)
- bank and investment account review (assist with opening bank and investment accounts, and reconciling such accounts monthly)
- claims management (whether directly or with involvement of a TPA, most management agreements include claims investigation, processing and payment)
- fronting, surplus, pooling, reinsurance arrangements (managers typically coordinate involvement with other insurance companies and captives that may be part of your captive program)
- investment guidance
- regulatory reporting and exams (filing required reports with domicile regulators and assisting with any examinations)
- actuarial assistance (engaging and working with actuaries)
- financial audit assistance (identifying and working with outside financial auditors)
- tax preparation (identify and assist with completion of income and other required tax returns by a 3rd party tax preparer)
- corporate secretarial services (assisting with board and shareholder meetings and maintenance of a corporate book)
- distributions and unusual transactions (sometimes managers assist with loans, capital financing arrangements, dividend approval, and wind up of captives but often for extra fees or with involvement of outside legal service providers)
- at least annual insurance program renewal reviews
- at least annual claims activity reviews
Types of Captive Managers
We are an independent captive manager and typically do not compete with other service providers. This enables us to remain as conflict free as possible to give clients the most objective advice possible.
But there are many types of managers other than independent managers.
Each form of manager has its own strengths and weaknesses.
Broker/managers, the largest group by number of captives, have resources for integrating traditional insurance products, fronting, reinsurance, and third-party administration (TPAs) into the program. Fees can be difficult to compare and determine as brokers tend to spread costs internally without revealing them.
A few lawyers, banks, accounting firms, and claims firms have become managers in order to feed their other lines of business. These structures can be restrictive to the captive’s operations and often result in added costs for services typically included by full service independent firms.
Independent firms also come in a variety of shapes, sizes, and competencies. We are a boutique firm highly selective of clients, and often work client projects closely on a contract basis with one or more of the largest firms in the industry when a larger global firm is more suited to a clients needs.