CSI International Underwriting (Cayman) Ltd.
CSI International Underwriting’s David Roberts and JS de Jager tell CIT why being an independent company is integral to managing captive clients
Considering the current strength and market presence of the large broker-owned managers, how do independent managers continue to attract captive insurance business?
David Roberts: Inevitably, the large broker networks will attract a significant proportion of the available business. However, independent managers have seen a great number of new licences coming through and there will always be a place in the market for bespoke offerings and a more tailored service than the large operators can provide.
JS de Jager: Clients really appreciate the close personal and business relationship that can only be delivered by smaller organisations. A large network of accessible professionals enables CSI to provide products and services that can be custom-made to meet the client’s particular needs.
In a marketplace that is dominated by large brokers ever expanding through mergers and acquisitions, your independence could be a real boon?
de Jager: It certainly is. CSI enjoys excellent relationships with clients. They know that they will have continuity in the people that they deal with and a consistent approach to their business. We tend to find that it becomes a personal as well as a business relationship. Larger providers, with regular staff turnover and restructuring, just can’t give that degree of focus. Because we are independent, we are not tied to in-house service providers or to contracted service providers. We can go to the specialist best suited to the client’s needs and circumstances. In doing that, we will work with the client, so that they are actively involved in the selection process and can make sure that their voice is heard. CSI works with external service providers in the US and elsewhere, selecting the most appropriate one on a case-by-case basis.
Presumably, this leaves you to concentrate on your core areas of expertise?
Roberts: Exactly. You don’t need to be big in order to provide a complete service. Working with external service providers enables CSI to deliver a comprehensive package to the client that is focused on the client’s overall requirements. The whole process is driven by the client’s needs, not the service provider’s systems, in-house services and already selected and contracted specialists—we don’t do ‘one size fits all’.
Surely one of the perils of being independent is that you lack the consultancy and brokerage network that can provide you with new business sources?
Roberts: This may be true to a degree as our competitors that form part of large brokerage networks automatically benefit from a passive flow of new business introductions. This being said, CSI has developed over the years a strong network of independent service providers with wide ranging expertise enabling us to tailor our services as may be required on a client by client basis.
de Jager: Many independent managers do work closely with firms of regional brokers that benefit from a Cayman connection. By nature, the regional brokers may be uncomfortable in having their client business managed by a primary competitor and place great value on having access to alternatives that are accommodating to their and their clients’ requirements.
Might some conclude that independence precludes a diverse book of business?
Roberts: Quite the opposite! As an independent manager, CSI has always had a wide spread of business and we would expect this to be common among other independent managers.
Do independent managers worry about consolidation within the industry?
Roberts: As in many areas, consolidation seems to be a major theme and it is inevitable that further consolidation with take place. Constant acquisition will mean that larger offices will continue to hold a large market share of the business. However, independents like CSI will continue to offer choice and an alternative approach. Being a somewhat smaller pond, we are more aware of, and attentive to, the fish!
de Jager: Competing with the larger companies is a genuine challenge for independent managers, but there will always be clients that value the individual approach and personal attention provided by CSI and most other independent offices.
How does CSI set itself apart from the competition?
de Jager: It is the hallmark of CSI that we are able to operate to our own high standards. It comes from our ability to treat our clients as individual businesses, not as part of an amorphous mass where they just get lost in the crowd. Larger organisations inevitably drift towards an internal set of achievement goals and priorities, because that’s how staff are judged. As an independent manager, CSI treats clients as individuals with specific and uncorrelated needs, enhancing the close business and personal relationship at all times. We will always strive to achieve the best outcome for our clients, rather than being hidebound by internal structures, reporting systems, targets, goals and so forth that bedevil larger organisations.
Is Cayman seeing a particular type of new business arriving?
Roberts: Within the context of the current prolonged, and continuing, soft market, Cayman is still seeing new licences for all areas of risk, with continuing emphasis on the popular and strong healthcare sector. Another area of significant growth in Cayman is in the use of Segregated Portfolio Companies (SPCs). The increasing interest in new formations and SPCs has been helped even further by legislative changes and the formal implementation of the new Insurance Law at the end of 2012, giving a more flexible approach to licensing and regulation, without reducing the high standards that Cayman sets for itself.
That situation is further enhanced by the industry-advancing regulations being tabled in 2013. In particular, the new Portfolio Insurance Company introduced by the new regulations offers far greater flexibility in the management of assets and risk.
Will there be any further changes in regulation?
Roberts: The regulation of the financial sector in the Cayman Islands through the Cayman Islands Monetary Authority (CIMA) is widely recognised as being to a very high standard, not least in the insurance sector. We should expect constant review of regulations, but CSI anticipates that the key regulatory developments in the immediate future will be more in the line of the further introduction of clear policy statements to further enhance our reputation as the captive insurance jurisdiction of choice. Many of the procedures that are already entrenched in the way that licencees operate and control their businesses have been and are in the process of being formulated and put into published policy statements and formal regulations. This is a general undertaking of CIMA for all areas of the financial sector in Cayman.
de Jager: With regards to the insurance sector, the updating and issuing of these policy statements and regulations have been and, in the main, will be, considered a positive step forward, generally formalising what has always been accepted as informal practice. Regulation in Cayman has traditionally been intended to promote business, while providing proportionate oversight and reporting.
Roberts: Cayman stands out as the domicile of choice for captive programmes. CIMA and other regulators, in light of an overall increase in regulation and know your customer procedures, are committed to compliance while still maintaining an open and welcoming approach to new business. Regulation in some jurisdictions is a burdensome cost-generator that interferes with business. CSI believes that CIMA has traditionally maintained a careful balance between ensuring effective regulation on the one hand, while at the same time avoiding unnecessary impositions on the industry that strangle innovation and cause untenable cost burdens.
