Your Choice of Captive Managers Matters
The Captive structure has a significant impact on the legal aspects of the captive but how these structures interact with the managers: brokers, independents, banks, accounting firms, claims adjusters, and in-house claims managers should not be overlooked.
Each form of captive manage has its own strengths and weaknesses. Broker/managers, the largest group by number of captives, bring networks and resources for integrating necessary traditional products into the captive structure. This would encompass fronting, reinsurance, third-party administrators (TPAs), and others. Fees can sometimes become difficult to determine as the brokers are able to spread costs internally without revealing them.
A few banks, audit 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. Should the other services not meet the goals and standards of the captive owner, it can be difficult to make changes to service providers.
Independent firms also come in a variety of shapes, sizes, and competencies, such as 10XB. While 10XB generally offers more variety of choice for the owner, not all captive managers are equal. The owner must carefully evaluate the professionalism, knowledge, and skills of the firm and its associates. Read more on 10XB’s qualification in “About is 10XB” and why we believe we are the potential service provider for your captive. Usually independent firms are the most transparent and are not incentivized to refer brokers, banks, auditors, and such.
• Arranging meetings
• Managing fronting and reinsurance contracts
• Working with attorneys and claims adjusters, banks, and investment houses
Depending on the presence and dictates of a fronting company, 10XB also issues the policies and endorsements and may also participate to a greater or lesser degree in the underwriting of risk.
A significant portion of 10XB’s time is with examiners and auditors. As the Financial Accounting Standard Board (FASB) and International Accounting Standard Board (IASB) changes its rules, the audit process has become more time-consuming, rancorous, and potentially expensive. 10XB is often the owner’s key line of reason in dealing with the auditors and examiners.