What Is a Captive Manager’s Role?

By BeneRe
January 12, 2024

Captive managers are critical to the success of most captives, whether single-parent or group. Here’s an overview of what they do.

Key Takeaways

  • Captive managers may be organizations or individuals
  • They provide outsourced day-to-day management of the captive
  • Responsibilities may include:
    • Financial reporting 
    • Regulatory compliance 
    • Business operations 
    • Treasury and financial management, including facilitating the captive’s annual audit
    • Risk management
    • And more

It’s important to find the right captive manager who can deliver expertise and ensure captive success in the long term.

Behind nearly every captive insurer is an excellent manager. Captive managers handle compliance and financial reporting tasks, while the captive stays client-facing and focused on growth. These managers are critical in the financial success of a captive since they have their hand in everything from regulatory compliance to taxes to business planning. 

So, what does a captive manager do, and why is it so important to choose the right one? This post will walk through the responsibilities of a captive manager, why they’re so important for captive success, and how BeneRe’s captive manager helps us improve the voluntary benefits market.

What is a captive manager?

Captive managers may be organizations or individuals, and they take on all the behind-the-scenes work for captive insurance companies. They handle managerial and administrative tasks to ensure that regulations are being followed and everything is in order financially. Sometimes a captive manager may serve on the captive’s board, taking on an advisory role for the organization.

Captive managers may work with:

  • Single-parent captives
  • Rent-a-captives or segregated cell captives
  • Association or group captives
  • Risk retention groups
  • Industrial insureds

Managing a captive requires a wide range of knowledge and skills in the fields of insurance, accounting, legal, finance, investing, actuarial science, tax, etc. However, running a captive does not typically require a full time equivalent employee. Captive insurance owners usually don’t have the resources to operate their captive insurer themselves. So, these owners hire captive managers to help with the back-end organizational responsibilities.

What are the captive manager’s responsibilities?

The captive manager will be most concerned with the day-to-day operations of the captive. Key areas within these tasks include management and coordination services, regulatory compliance, and financial reporting and management.

So, here is a list of what these responsibilities may entail for the average captive:

  • Ensuring and monitoring compliance with policies and domicile regulations
  • Coordinating board meetings and other gatherings
  • Managing audits and actuarial reviews
  • Maintaining records and bookkeeping
  • Creating and delivering financial and operational reports regularly
  • Managing income tax preparation and filing captive premium tax returns where applicable
  • Facilitating domicile examinations every few years
  • Providing guidance and expertise about underwriting
  • Facilitating risk management 
  • Developing business plans
  • Coordinating the work of the captive’s other service providers

Captive managers provide these ongoing services in exchange for an agreed-upon fee. These service providers are long-term partners of the captive. They’re around to manage all the daily operations throughout its life, so it can stay healthy and successful.

Why are captive managers so important?

Because captive managers take on so many responsibilities for the owner, they can essentially make or break the captive. These managers need to have a lot of experience in the insurance industry, so they know how to follow regulations and implement best practices for captive management. Captive managers may be deeply involved in the formation of the captive, its long-term development, and its ultimate success.

Legal and regulatory compliance requirements are very important for a captive. Captive managers need to ensure that the right risk management strategies are put in place, so the captive is never at risk of making a costly mistake.

It’s important for the success of any captive that they choose the services of the right partner. This one decision can decide the failure or success of the captive.

Here are a few factors to consider when finding the right captive manager:

  • Experience: Do they have a solid track record of helping captives similar to yours? Do they have testimonies and reviews you can reference?
  • Trust: Your captive manager will essentially be an extension of your captive with significant fiduciary responsibilities and often access to the captive’s funds. You need to ensure you can trust them to align with your goals and provide honest practices. Assess how dedicated the captive manager is and whether it’s a person or company you can trust and rely on.
  • Potential for long-term: You want to work with a captive manager that will be your partner for many years to come. They can only improve their services the more they get to know your captive and your goals, so changing managers can have negative impacts.
  • Location: Sometimes it’s beneficial to find a partner with local expertise since they’ll have to know regulations in the applicable jurisdiction.
  • Technology: Is the captive manager integrating the latest systems for reporting and management? Using high-quality technology will improve efficiency.
  • Cost: Of course, cost will always be a consideration when looking for a manager. Find a partner that will fit within your budget, but never sacrifice quality of service for a better price tag.

There are many options out there for captive managers, including both small and large providers. As long as staffing is sufficient to ensure there are backups, the size of the firm doesn’t matter as much as the value and quality of the services it can deliver.

How BeneRe works with our captive manager

BeneRe wouldn’t be able to function as successfully without the help of our captive manager. We work with Strategic Risk Solutions (SRS) for all the behind-the-scenes management. SRS is the world’s largest independent captive manager and consultant, and they’re experts in insurance.

Backed by SRS, our group captive model is able to deliver a top-tier experience to our clients. They provide timely, high-quality services, including reporting, financial management, regulatory compliance, and much more. We’re able to focus more on running the group captive and being there for our clients while SRS is handling everything in the back office smoothly and efficiently.

SRS helps us offer a better voluntary benefits solution for both employers and employees at a lower cost than the norm. Premiums for accident, critical illness, and hospital indemnity coverage are pooled together with other companies, and claims are paid out of that pool. Plan dividends go back into the employee wellness programs, not the insurance industry.

BeneRe’s model is fully transparent, so employers know where every dollar is going. SRS supports BeneRe in meeting its mission and positively disrupting the insurance market.

Reach out to BeneRe today for a complimentary financial analysis of in-force programs.