Captive Insurance Solutions (NZ)
Captive Insurance Solutions (NZ) has established itself as the only exclusive captive facilitator in New Zealand, Australia and the South Pacific. Dean Spense and Rodney Mathers explain more
How and why was Captive Insurance Solutions (NZ) created, and how has it developed since its inception?
Dean Spense: Captive Insurance Solutions (NZ) commenced operations in August 2014 and was formed as a result of an obvious gap in captive insurance services in New Zealand. Historically, government regulations did not discourage captives in New Zealand, but as a result of changes to the Insurance (Prudential Supervision) Act 2010, entities wishing to establish a captive facility were faced with the same prudential requirements as a conventional insurance company, complete with large cash and reserve requirements.
This had the effect of discouraging the establishment of New Zealand-based captives and even the major broking firms, by and large, dissolved or lost their New Zealand captive teams, and their clients were then referred to offshore sources.
As a result of this, while there was still a demand for captive facilities, the local level of expertise largely disappeared and Captive Insurance Solutions (NZ) seized upon this as an opportunity to assist and guide entities that were obvious candidates for captive solutions, but for which their own brokers could not assist them without calling in help from elsewhere in the world.
Rodney Mathers: The reception we have been receiving from prospective entities has been overwhelming. These entities are looking for maximum transparency, through the elimination of undisclosed commissions by the reduction of as many middlemen as possible.
Publicly-listed companies are compelled to perform to minimum standards, producing maximum profits to their shareholders and the captive model provides this and allows these companies greater opportunities through reducing costs, better control and improvement of their bottom line results.
What is the ultimate goal for the company? Do you predict more uptake of captives in the region?
Mathers: Our goal is to identify opportunities, audit our clients’ risk requirements, then set about implementing and managing the establishment of a captive solution.
Our strengths are that we are completely independent of any umbrella or overseas control and our goals are to draw upon our combined decades of insurance experience to provide significant resources and information—locally and without delay.
Most companies we talk with have little or no idea of the captive concept, and their brokers never broach the subject as their knowledge is lacking. Our role as facilitators and educators will undoubtedly assist those companies that have largely overlooked the captive concept.
Spense: There is no doubt that businesses are looking for an alternative solution, and while we appreciate we are enjoying a soft market currently, we all know that our industry is cyclical and, as a result, the establishment of a captive now will secure the benefit of time in levelling out the ups and downs of the insurance industry. It most certainly allows the client to have total control over all aspects of the insurance programme.
What have been some of the major challenges in establishing the company?
Mathers: The establishment of Captive Insurance Solutions (NZ) has been relatively straightforward: like-minded individuals with like-minded purposes and goals. The challenges, however, have been somewhat more interesting.
Most of the clients we have liaised with recently have programmes placed via one of the international broking firms such as Marsh, Aon, JLT, Willis and Crombie Lockwood. These firms will not accept the loss of a major account so our involvement has certainly created ripples in the market as a result.
Why has it taken until now for a company like yours to emerge?
Spense: Legislation in New Zealand and Australia now discourages the formation of a locally-based captives. Furthermore, captives have been largely misunderstood or deliberately overlooked. Our determination is that the internationals have the ability to assist their clients with a captive, however, it is not in their interests to consider this form of risk transfer. Captive Insurance Solutions (NZ) is committed to focusing on our clients’ requirements, ensuring total transparency is adopted with the entire process and establishment.
Are there any upcoming regulatory hurdles that could hinder growth?
Spense: No, the change to the Insurance (Prudential Supervision) Act of 2010 has been in force for a number of years now and as such, this piece of legislation has been firmly adopted by insurers and the public at large.
Although the Reserve Bank of New Zealand is considering a number of issues relating to how insurance is transacted in New Zealand currently, these, such as implementing additional transparency with fees charged and commission earned, have already played a part in our strategy and Captive Insurance Solutions (NZ) is one step ahead in this respect.
