A captive-ating rise to the top

With all of the energy around innovation, digitisation, re-engineering and the all-around changes in the world today, it seems that, for the most part, the insurance industry is still largely a very slow-to-adapt marketplace.

We’ve seen some very exciting innovations when it comes to market disruptors in the insurance marketplace over the last decade, but this trend is still in its relative infancy and provides ample ground and opportunity for those who truly understand the market or are willing to learn it. For today, let’s concentrate on the latter.

“Hey Mike, have you worked with any captive insurance companies before?” was a question I received back in 2012 from Paul, a senior partner who had rejoined EY in 2011 from another Big Four. At that time, Paul had more than 17 years of experience serving the captive insurance market across a number of various aspects.

Paul noted that he was re-building the practice that EY used to have during his last stint at the firm, and he was looking for people with captive insurance experience who wanted to learn something new and exciting, and rebuild the services offering. He didn’t have to ask me twice! Where do I sign up?

As a newly minted senior manager, I was already looking at the next level and what I needed to do to get there. New and exciting? Well, it sounds like something one may want to try to bolster the resumé and learn additional skills.

To be totally honest, while I did have prior experience with captive insurance companies, it was mainly in the audit support, tax compliance and tax provision space. At that point, I had not done a single feasibility or utilisation study from start to finish, although I had seen and read through them for several of my clients.

I had a healthy understanding of the inner workings of book accounting, certain quirks and how the general insurance market worked. To a large extent, this was all thanks to my mentors within EY and projects I had done for my other clients, large commercial carriers. Looking back, I had a decent launchpad to jump headfirst into this new adventure.

Over the next roughly 12 months, I had a crash course in product and programme design and structuring, the intricacies of building insurance towers, reading various insurance policies and understanding how they work, technical aspects of Internal Revenue Service rulings, advice memorandums, and various courts’ views on captive insurance tax qualifications and other matters. Overwhelming? Somewhat. Exciting and breathtaking? Definitely!

The need for new talent

Why am I telling you all this? The main reason is that, once I started getting more hands-on experience in the captive insurance space, balancing my time investment with the general insurance clients I was serving in my capacity as a tax senior manager, I realised that although at EY we were building an amazing global captive practice, the resources in general were slim.

There were just not that many people who specialised in the captive insurance space, compared to other aspects of the market. This equally applied to tax, actuarial, corporate risk management and many other practice areas.

The industry was, and to a large extent still is, filled with experienced professionals who did not have, or did not put, a good apprenticeship model in place to bring in the new, fresh talent. Undergraduate and graduate students were going into actuarial, tax, financial analysis and risk management fields, but took on jobs dealing with broader commercial markets, global enterprises, etc.

Most did not really focus on, acknowledge or sometimes even know about the fast-growing captive insurance industry that was inching its way forward in the overall global insurance market and the opportunities it opened up.

As I started attending conferences around the globe, taking in the atmosphere of this specialty market and learning how it interacts with broader commercial insurance market around the world, my worst fears were confirmed. I was the “kid”. With an average age of a conference participant and a professional in the captive insurance market being nicely over 40, with some hitting their late 60s, it seemed hard to find someone close to my age, even for an informal chat at a bar.

Not only that, but most of the “town elders” seemed to have known each other for decades. Don’t get me wrong, plenty of those conference and technical workshop attendees were, and are, more than happy to have a casual discussion over a drink (and trust me, I learned and absorbed as much knowledge as I could from those discussions), but the truth remained: there was a big disconnect between existing and new talent.

As years went by, I started to notice a shift. A few more actuaries, tax advisors or captive managers who showed up at these events, or whom I came across while working on client engagements, seemed to be in their late 20s to late 30s. Some had switched over into the captive insurance space, and some changed careers completely to be in it. The younger ones seemed to somehow find their way into the industry from college or graduate school—but it still was not enough, and it is not enough just yet.

As an industry, and with the sponsorship of some of the colleges, universities and professional organisations, we are doing better in bringing in younger talent, but I truly believe that more is needed. We have such an untapped pool of potential and innovative thinking among the recent graduates and younger professionals that it is incumbent upon us to introduce them to this industry and show them the opportunities they can have here.

With the exception of a few, our education institutions do not include insurance or alternative risk management-focused curriculum, nor do they offer a list of sub-industries that comprise the insurance industry, such as captive insurance, and outlets such as focused conferences and technical sessions that would allow an interested participant to attend and be immersed in the experience. There are also very few (although the number is growing) apprenticeship models that would allow graduates and young professionals to spend time with seasoned industry experts and learn the trade to see whether this is a career path they would want, full-time or at least to some extent.

What happens when eager, hungry minds are paired with mentorship-focused, seasoned professionals and are given opportunities to learn, hands-on, an exciting new set of skills? They start to reach for the top.

It is such an amazing thing to see groups of young professionals flocking together at the recent conferences (even though they are virtual in some cases due to our world’s current predicament). The wheels are turning, and we are getting some momentum, but our work is far from over.

The captive insurance industry is here to stay and proliferate, opening more exciting opportunities to young talent across dozens of facets and areas of the captive insurance market covering finance, tax, risk and actuarial advisory, management, insurance and reinsurance, banking, regulation, legal and so much more.

What happened to this young and eager senior tax manager who received an unsolicited invitation to work on a captive insurance project? He took the bull by the horns and, in a few short years, has risen to the executive level of this specialty practice within EY, including being promoted to partner and most recently taking over as the Americas captive insurance services co-leader.

He is building a better working world, one captive insurance client at a time. Dream big—the bigger, the better.

Mikhail Raybshteyn is a New York-based tax partner in EY’s global insurance sector. He is a member of the EY global captive insurance network and is the EY Americas captive insurance services co-leader. He can be contacted at: mikhail.raybshteyn@ey.com