What is the biggest misunderstanding about captive insurance?
Owners do not think about insurance, and the people who do are not paid to raise it
Queen locates the misunderstanding in two places at once. Most owners file insurance alongside the retirement plan as an administrative line item and never examine it. And the advisers who could raise a captive are frequently not trained to spot the opportunity, or are not paid well for it when they do.
The first half is about attention. Insurance is not interesting to most chief executives, so it goes in the same bucket as the retirement plan and the health plan, something a broker handles. Opportunities get missed simply because nobody is looking.
Key takeaways
Queen says owners treat insurance as an administrative line item, which is why captive opportunities go unexamined.
He frames the adviser problem as incentives rather than competence, and is explicit that many brokers know the subject better than he does.
His model adviser uses a captive selectively, for the risks the conventional market handles badly, rather than proposing it everywhere.
The second half is more uncomfortable, and Queen is careful with it. He says plainly that plenty of brokers are smarter than he is and could school him on captives, so this is not a competence claim. It is an incentive one: a captive placement does not always pay a broker as well as the alternative, and it is hard to get anyone to understand something they are economically incentivised not to understand.
From the conversation
Matt Queen
Captive Insurance Attorney and MGA Executive, Author of Modern Captive Insurance
“I don't think that the insurance brokers are adequately trained to identify captive opportunities.”
Transcript
Read the full transcript 9 turns
HostWhat do you think that the single biggest misunderstanding in the market today about captives is? I think
Matt Queenthat the end users of captives still don't really understand what they are because insurance is not the most interesting thing for most people. Most CEOs just put insurance in 401(k) and health care plan on the same bucket. You have a broker. And a lot of opportunities are missed. I don't think that the insurance brokers are adequately trained to identify captive opportunities. But with due respect to the brokers
Matt Queen, not all of them are dumb-dums. There's a misperception about insurance brokers
Host. There are plenty. I
Hostheard there were C students that make A+ money. But
Matt QueenI do want to speak reverently about
Matt Queenbrokers for just a moment. Many of them are very smart. Many of them know exactly what captives are and could school me on a few things about captives. But they don't necessarily always make all that much money with captives. So it's difficult to get someone to understand something economically incentivized not to understand. So why
Matt Queenwould I put a captive in front of you if I proceed that's going to be worse off for me? Now, some brokers are at that level. I think the true measure of a broker, like the real genius brokers are the ones who understand when to leverage a captive to make more money. So if you wield the captive as a part of special teams where it comes in to fix problems, that's a winner right there. And that's really where I think captives should exist. They should be on the special teams. I don't ever foresee captives as
Matt Queentaking over in any meaningful sense. I mean, there's something to be said for the vast pools of money that are available to be admitted in the ENS carriers. They are stable. Captains don't ever go out of business. Hold on. Let me say that again. ROGs are stable. Their receiverships are a few in-farm between. Captains, for the most part, don't go out of business. And even when they do, it pretty much just only harms the parent company, so for the most part, the consumers are fine. But
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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