With music from Stevie Wonder pumping through the speakers, the Captive Insurance Companies Association (CICA) 2013 International Conference was raring to go.
With music from Stevie Wonder pumping through the speakers, the Captive Insurance Companies Association (CICA) 2013 International Conference was raring to go.
CICA president Dennis Harwick kicked things off, explaining the reasoning behind the conference’s ‘new horizons’ focus. He said that prior discussions with committee members unearthed many fears over certain changes—mainly environmental and regulatory—that were “just over the horizon”. As a result, the conference programme focused on a series of sessions aimed at addressing these worries and finding solutions to imminent problems that the industry is facing.
In keeping with this theme, the keynote speaker for the conference was demographer Ken Gronbach, who is the author of The Age Curve: How to Profit from the Coming Demographic Storm.
While Gronbach isn’t a captive insurance expert, his Demography 101 presentation brought home how relevant people are to economics. He outlined the demographic trends that are set to affect the captive insurance industry, lamenting how “groups of people are predictable”, and that in order to prepare for what’s next, the industry must go back to basics and look at simple population demographics.
A magnitude-4.7 earthquake unexpectedly interrupted Gronbach’s presentation. Unperturbed by the blip in proceedings, Harwick took to the stage to thank Gronbach, adding: “We’ve had some pretty influential keynote speakers but never one who has made the Earth move!”
A session on the Affordable Healthcare Act, which had Nancy Gray of Aon Insurance Managers as its moderator, followed in the afternoon. The panel was made up of Ron Calhoun of Aon Risk Solutions, Rafael Gonzalez of Gould & Lamb and Sarah Pacini of Advocate Healthcare Network.
The session outlined the numerous additional risks that healthcare reform would bring to healthcare entities, including financial strategic, regulatory, operational and clinical exposures, and focused on how captives can help to address these challenges.
When asked what she felt were the most significant risks facing healthcare, Pacini said that it was the rate at which changes were going to occur that worried her most.
Pacini explained that while her organisation has been working towards clinical integration for a number of years and is well on its way with healthcare reform, others aren’t as prepared.
“However, there are some institutions that have waited to see if the constitutional challenge would be overturned or if healthcare reform would continue on, and that waiting may have delayed their ability to build the infrastructure and identify the resources that are going to be necessary to make them successful. So the rate at which they are anticipated to build that infrastructure and create those resources will be such a challenge that it’s likely for them that they will be unsuccessful.”
The session also addressed the requirements of the Medicare Secondary Power Act. Amendments to the legislation in 2003 and 2007 mean that parties settling workers’ compensation and liability cases now have to consider Medicare’s interests.
Gonzalez explained that while everyone has been paying attention to what the Affordable Healthcare Act has brought to the table, Medicare has silently been producing the systematic process that makes sure that captives and other parties have taken its interests into account when settling.
“Medicare has been in workers’ compensation cases since 1965 and in liability cases since late 1980 and has been building this process very methodically to be absolutely certain that every tax dollar thats being spent on medical care through the Medicare system is in fact reimbursed.”
The final day of the conference had a session on the changing regulatory environment. It focused on the potential changes that may be imposed on US accounting, financial and regulatory standards by the actions of the International Association of Insurance Supervisors and other international bodies.
The session delved deeper, attempting to understand complications arising from tensions between state and federal regulatory actors and the potential impact on captives.
Moderating the session was Robert Myers of Morris Manning & Martin LLP, with speakers Tom Finnell of the US Department of the Treasury’s Federal Insurance Office (FIO), Debbie Lambert of Johnson Lambert LLP and Shanna Lespere of the Bermuda Monetary Authority.
Myers explained that tensions between the National Association of Insurance Commissioners and the FIO have arisen because the former has been around for some time while the latter is a new kid on the block. An upcoming FIO study will have a point on captives, but it isn’t clear “whether it is going to be benign or malignant”.
Although the speakers focused on the finer points of regulation, attendees drew their attention to the costs that they incur. After some awkward laughter and Myers saying that “nobody wants to answer that question”, Lespere chose to take a stab at it, while staying “politically correct”.
Lespere said that while she and others are paying attention to costs, the captive insurance industry must remember that the frameworks that are in place are important in insuring that regulators globally are moving towards a mutual territory in terms of compliance with standards. She added: “There are [also] a lot of benefits that are sometimes unseen.”
