Missouri Department of Insurance
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How has Missouri fared in terms of captive insurance growth in the past six months? Are there any new strategies in the pipeline for 2015/16?
In Missouri, we believe that the overall health of our captive industry is more important than the number of captives we license each year. We believe steady growth and sustainability is the key to a successful captive programme. Our captives are subsidiaries of some very noteworthy industry leaders and are generating billions of dollars of premium volume as a result.
I joined the Missouri Department of Insurance about 18 months ago and we have licensed 20 new captives in that time. Quality is the key to long-term success. Our goal is to set a standard of excellence and attract first-rate, superior captive business, and therefore we do not set specific targets. That being said, we do have a desire to responsibly continue the growth our captive programme.
How supportive is Missouri’s government to its captive insurance industry?
Missouri appreciates the opportunities for economic development within the captive industry and dedicates the resources necessary to support its success. In fact, Missouri’s captive insurance law includes a dedicated funding mechanism so we can maintain our experienced staff, bring in new technical talent as needed, and continue to manage all aspects of our captive insurance programme without the need for outsourcing.
We also maintain offices in St Louis, Kansas City and Jefferson City, and we use those offices to ease the burden for out-of-state travellers who are interested in forming a captive in the State of Missouri.
Are there any regulatory changes coming up for the state in 2015?
We do not have immediate plans to make any revisions to our captive insurance laws as those we have in place now are working well for our state, however, we continue significant outreach to the captive community. We are always interested in hearing proposals and ideas as we work with those in the captive industry to develop new solutions.
Generally, we continue to focus on solvency modernisation initiatives that are important to both the captive insurance industry and the insurance industry at large.
With the IRS increasing its scrutiny of micro captives, does this concern a state as established as Missouri?
We have not structured our captive programme in Missouri in such a way that we focus on or favour any specific type of captive structure or line of business. We consider every captive applicant on the merits of its application and carefully review every captive application to ensure compliance with our laws and regulations. We have captives writing anywhere from one line of coverage up to 20 lines of coverage.
Missouri captives are formed to mitigate exposure to a wide range of risks.
Practically every risk underwritten by a commercial insurer can be provided by a Missouri captive. The majority of our captives provide mainstream property/casualty insurance coverage such as general liability, product liability, workers’ compensation deductible, director and officer liability, errors and omissions liability, auto liability and professional liability. Some of our captives also provide specialised coverage for unusual or hard-to-insure risks.
Here, our focus is on creating a sound and solid captive regulatory environment that serves as an asset to companies doing business in the state of Missouri. We do this by being both responsible and responsive to the needs of the business community and the captive industry in our state. We provide prudent and balanced regulatory oversight of each licensed captive for the most favourable long-term effect on the captive industry.
How important is solvency in a Missouri captive? Is the state making any steps towards equivalence with Solvency II jurisdictions in Europe?
One of our primary responsibilities as insurance regulators is ensuring the solvency of the companies we regulate. The globalisation of insurance makes it clear that insurance supervisors around the world need to provide well-defined and unambiguous guidance to afford the financial system with a pillar of stability and consumers with peace of mind.
The role of insurance supervisors has never been more critical. It is my belief they need to work with present supervisory systems rather than thinking new globalised standards can be used to dramatically reshape those established under existing law.
As we move forward on solvency issues, practical and implementable change should be evolutionary, not revolutionary. Further, the work done by insurance supervisors must be credible, and it therefore must be transparent. Transparency is critically important in developing the national and global response to financial stability.
As insurance regulators, it is important to recognise the specific nature of the insurer and the risks posed. The most efficient supervisory regime tailors its approach so that policyholders are protected and financial stability is maintained, without applying regulation that, with regard to the nature of the company, is unnecessary and may hinder the efficiency of the market.
Insurance supervisors should take the necessary time to develop standards appropriate to the insurance industry, and resist the pressure to homogenise regulation to treat all products the same.
It should be well recognised that confidence in the integrity of insurance regulation must be maintained in order to ensure the viability of the industry.
Is the state continuing to educate the industry?
Missouri hosted its own captive insurance conference in the autumn of last year and will play host to the Western Region Captive Insurance Conference in May.
We devote a significant portion of our time to meeting with not only companies that are interested in forming a captive in Missouri, but also the various service providers in the industry, including actuaries, accountants, lawyers, agents and brokers.
One of our primary marketing objectives is to provide networking and educational opportunities for our captive owners to facilitate captive growth in Missouri.
