Innovation, internships and initiatives: the Arsenal story

Founded in 2006, Arsenal Insurance Management is nationally recognised as a leader in the captive insurance industry due to its breadth of resources, broad range in coverage design and capability, geographical footprint, a lead position in innovation in writing captive legislation, and significant growth in its book of business.

Arsenal delivers broad customer solutions in risk management for captives, mutuals, risk retention groups (RRGs), health plans and other insurance entities, incorporating alternative and traditional insurance capabilities through office locations in Alabama, Georgia, Florida, Tennessee, Vermont, and a strategic partnership in the Cayman Islands.

Within the past year, Arsenal was one of the central figures in drafting Alabama’s new legislation. The comprehensive update to the Alabama Captive Insurers Act propelled the domicile to the forefront as one of the most attractive in the country. Some of the key components include:

• Creation of reinsurance captives: an innovative take on producer affiliated reinsurance captives (PARCs), broadened to include all captives reinsuring business from an insurer. Capital requirements start at $10,000.
• “Legal there, insure it here” doctrine: as long as the risk is legal in the jurisdiction in which the insurable activity occurs, the risk may be managed in an Alabama captive.
• Dramatic re-thinking of branch captive legislation by broadening lines of business allowed with reasonable capitalisation requirements. We believe this is one way to address self-procurement tax concerns.
• Further strengthening Alabama’s commitment to RRGs by simplifying and organising the requirements of an RRG and clarifying that a surplus note may be used to capitalise an RRG.

Since the passage of the legislation, Alabama has already experienced strong interest from captive managers and owners around the world. Arsenal has worked tirelessly to create an environment that fosters a strong alternative risk industry. The new legislation allows for a wide variety of captive formation types that can be tailored to meet the needs of the client.

Known for creating innovative solutions for their clients, Arsenal remains on the cutting-edge. One of Arsenal’s most significant innovations during the past year is the completion and implementation of a risk-based capital (RBC) model that allows RRGs and traditional insurers to better predict RBC levels based on various factors. This model includes showing options for captive and other alternative risk structures where appropriate.

Additionally, Arsenal is one of the co-founders of the award-winning Risky Business internship programme. The programme has grown rapidly over the past two years, adding new higher education partners and corporate participants, and overall applications and interns have hiked. The programme allows qualified applicants to experience several different sectors of the insurance industry while building relationships with regulators and industry professionals.

Another positive innovation includes the development of a captive programme, Iron ReHealth, to allow microcaptives to assume medical stop loss from a pool of unrelated employers that participate in the programme.

In light of recent Internal Revenue Service (IRS) activity regarding microcaptives, this programme has enjoyed 100 percent participation by the microcaptive segment of Arsenal’s book of business. These captives view this programme as another tool to illustrate a properly run microcaptive programme.

Arsenal has also developed several unique and responsive initiatives for industries such as commercial transportation, the gig economy, and real estate and property developers.

For example, within the traditional transportation industry, Arsenal has required the use of telematics while working with companies to cover their exposures under a usage based risk approach.

Such structure has allowed the client to gain more control over its exposures, pay a premium more relevant to the exposure and, most particularly, introduce as part of the captive very sound risk management capabilities which will lead to improved loss ratios.

Arsenal has been working closely with its clients to develop solutions to work through the challenges caused by the COVID-19 pandemic, such as preparing paycheck protection programme applications and forgiveness requests for captives, health plans, and their owners.

With the constant changes and increases that occur in the traditional health insurance market, the development of a captive programme by Arsenal, Iron ReHealth, gives small businesses another option for managing health risks.

This programme also allows microcaptives to assume medical stop loss from a pool of unrelated employers that participate in the Iron ReHealth programme. It has enjoyed strong participation by microcaptives, thus improving the societal and governmental perception of microcaptives.

The Iron ReHealth captive provides another option in the health insurance marketplace for small businesses without many traditional market options. The Iron ReHealth medical stop loss programme allows businesses smaller than 200 to self-insure and utilise a captive to spread risk. Without this programme, most small businesses have no options for self-insurance of health risk.

Arsenal has a diverse portfolio of nationwide clients that include companies in the agriculture to transportation industries within structures that range from protected cells to single parent to association captives and a growing number of risk retention groups and health plans.

Arsenal provides risk management solutions in property and casualty, health, title, surety, and pre-need funeral coverages. Arsenal offers a fully bundled (turnkey) to an unbundled management capability based upon the client’s resources. Today, Arsenal has over 800 captives and health plans under management.

Norman Chandler is the chief executive officer of Arsenal Insurance Management. He can be contacted at: nchandler@arsenalrmi.com