Why should a graduate choose a career in captive insurance?

Where to begin? Looking back at my now 36 years working in the captive insurance industry I can promise you, like most, I had no intention of working in the “insurance” business.

I fell into it as a young Scottish accountant looking for adventure after qualifying as a chartered accountant by taking an audit posting in Bermuda. There, working for Price Waterhouse (now PwC) I found myself auditing these strange “insurance” companies called captives and was fascinated by the many varied reasons for their formation and the many different programmes and structures that were being utilised.

I have since spent many years in varied locations (Bermuda, Hawaii, South Carolina, and Vermont) and have remained in this industry because of the diversity of the industry and what it can do for companies. It has also given me the ability to create a meaningful and interesting career and allowed me to enjoy locations outside the usual corporate world.

The what and the where

What kind of careers are there? Business development, regulatory compliance, actuarial, insurance and reinsurance structuring, claims oversight, state examiners, state regulators, accounting management and audit accounting and tax planning, to name just a few.

What makes this a potentially rewarding career can be tied back to one of the old captive catchphrases: “When you have seen one captive, you have seen one captive”.

The variety of reasons to form a captive and the multiple types of structures that can be utilised mean that no matter what function you are involved with, you are likely going to need to respond to changing situations.

As new programmes are added, new types of coverage created, and changes are made in the owner’s business, a captive insurance vehicle should be constantly evolving to reflect the changing environment in which it is operating.

Many of the job titles I listed under “kind of careers” would probably elicit eyerolls from soon-to-be graduates in that they sound “boring”. However, in 2021 alone, I have been working on captive insurance projects covering wind, solar, renewable natural gas, commercial property, residential property, commercial automobile for fleets and trucking companies, medical stop loss for hospitals, healthcare integration, package insurance, pandemic coverage, earthquake and named storm insurance, supply chain, key man life, credit enhancement, residual value, parametric triggers for hailstorms and more traditional coverage such as workers’ compensation, general liability and professional liability.

When I started in 1986, cyber insurance, supply chain, reputational risk, pandemic and parametric coverages did not exist.

Where are the jobs in the captive insurance industry? Nowadays they are in many more locations than when I started. In 1986, it was Bermuda, followed by a few other offshore jurisdictions including Barbados, the British Virgin Islands and Cayman, along with some smaller European locations including Guernsey and Isle of Man.

Vermont, at the time, was in its infancy. It was still fairly small when I moved to Vermont in 1989 and at that point there was a need for the state to recruit captive talent from offshore as there was still only a small captive insurance footprint domestically in the US.

More than 30 years later, there are now four or five centres for captives in the US (Burlington, Vermont; Charleston, South Carolina; Honolulu, Hawaii; Nashville, Tennessee; and Phoenix, Arizona) and multiple other locations where there is a captive presence including Alabama, Georgia, Nevada, North Carolina and Texas.

In the Caribbean, the old players remain strong (Barbados, Bermuda, Cayman) and have been joined by a re-emerging Bahamas and small presences in Anguilla, Puerto Rico and the Virgin Islands.

In Europe, Ireland, Luxembourg and Malta have emerged, and globally Labuan, Hong Kong, Micronesia, and Singapore are now respectable domiciles. “Outsourcing” has created captive centres in India and Nova Scotia, Canada.

The non-traditional approach

What kind of education and or training makes you a good candidate for the captive insurance industry? Captive insurance is a formalised method of risk financing so even today many of the hirers are recruiting candidates with accounting, financial or economics in their qualifications.

Insurance training is very helpful and if the industry appeals to you (or the career locations), many companies are willing to train people with a diverse background on elements of business and insurance and data management.

I believe that, as an industry, we have to sell ourselves as the “anti-insurance” solution, to emphasise the non-traditional approach to risk and risk financing that our industry is seeking to promote.

Another old captive expression—“Have you ever seen a captive insurance company sponsoring a golf tournament or running a Super Bowl ad?”—is meant to highlight that our industry seeks to reduce frictional costs, manage appropriate levels of risk, and transfer off the unpredictable levels that could adversely impact a company.

The image of insurance to the average person on the street is car, home, or workers’ compensation insurance, coverages that evoke thoughts of doing exactly the same thing in selling, processing and administering over and over again. Instead, we need to promote our niche in the industry as innovative, constantly evolving and dealing with all kind of companies and risks on a daily basis. We must emphasise that the variety and complexity you can face will continue to grow with you, as your expertise develops in this industry.

Where do we find our job candidates? In several locations, such as Burlington and Charleston, there are growing efforts to engage with the in-state institutes of higher education so that students know that there are creative finance and risk jobs available in these states.

Other innovative universities, such as Butler University, are working with companies and also establishing a captive insurer to expose their students to our niche within a niche.

The International Center for Captive Insurance Educations (ICCIE) in Burlington, Vermont was founded more than 15 years ago and is another tool available for employers to utilise in helping “train” new staff in the nuances of the captive insurance industry.

It is a very beneficial programme for almost everyone in our industry as it covers all aspects of running and managing a captive insurance company, including education on risk management and risk financing and diving into investment policy and good corporate governance.

Taking the next steps

If any of this sounds interesting, how does someone take the next steps and find companies who are looking for professionals to work in the captive industry? Industry media websites, such as Captive International, are a great place to start to see the significant players in the industry.

It is also beneficial to know where the likeliest locations are to find job postings relating to captive insurance. For example, Marsh is a huge player in the captive industry but looking up jobs at Marsh will probably not be specific enough to narrow a search appropriately.

By targeting major locations such as Bermuda, Burlington, Cayman, Charleston, Dublin, the Isle of Man, Guernsey, and Malta the odds are much greater that any openings will have some connection to the captive insurance field.

Other major employers include brokerage firms such as Aon, Gallagher, and Willis Towers Watson; captive specialist firms such as Captive Resources, Innovative Captive Solutions, and Strategic Risk Services; as well as actuarial and audit firms such as Carr Riggs & Ingram, Crowe, Johnson Lambert, Milliman, and Pinnacle.

It should also be mentioned that many “traditional” insurance companies will have alternative risk divisions so it is still possible to specialise in our niche and work for major industry companies such as AmTrust, Great American, PMA, and Travelers, and reinsurers such as AXA, Munich Re, and Swiss Re.

So, go out and spread the word: captive insurance is the “anti-insurance” where you get to be innovative, respond to ever-changing market needs, work in many varied locations and get involved with every kind of business that needs to deal with insurance and is willing to recognise that a captive will help it reduce costs, grow its capacity and gain greater control over its coverage and claims process.

I have spent 36 years travelling the world, spreading the message about the effectiveness of captives to mitigate insurance problems and I will happily say to people considering this industry that I am confident this niche will remain an important tool for business for decades to come.

You have an opportunity to thrive in this niche for a long and prosperous career as well. I have dealt with hundreds of different companies and have travelled to 48 states and many countries because this industry is now meeting a global need and its use will continue to spread as companies respond to our changing world.

Gary Osborne is vice president for alternative risk at Risk Partners. He can be contacted at: gosborne@riskpartners.com