Does a regulator treat a real estate captive differently?
The review follows the risk profile, not the industry
Fenhua Liu says real estate is simply one industry among many in a book of over a hundred captive entities, and that the department treats each application on its risk profile rather than on the sector behind it. What it reads is the same list every time: whether there is enough capital to pay claims, the aggregate limit and sub limits, whether there is a fronting carrier, and who owns the risk. She does allow that different industries carry different exposures and risk management needs, while the review philosophy stays the same.
The answer is a clean no, and the reasoning behind it is more useful than the answer. Liu points out that real estate already appears in Connecticut's book in more than one form: a cell owned by a real estate business, or a captive owned by a real estate company.
So the question of whether the department has a real estate policy has an easy answer. It has an application policy, and real estate applications go through it.
Key takeaways
Connecticut assesses each captive application on its risk profile rather than on the industry the owner comes from.
The department reads capital adequacy against claims, aggregate and sub limits, whether a fronting carrier is involved, and who owns the risk.
Liu allows that industries carry different exposures and risk management needs while the review philosophy stays constant.
What the department reads is the risk profile. Liu lists it: whether there is enough capital to pay the claims, what the aggregate limit and sub limits are, whether there is a fronting carrier, and who owns the risk.
None of those questions changes if the owner runs apartment buildings rather than a manufacturing business. They are questions about the programme, and the programme is what is being licensed.
From the conversation
Fenhua Liu
Assistant Deputy Commissioner and Director of Captive Insurance, Connecticut Insurance Department
“we treated each application differently based on the risk profile it has, not based on the industry”
Transcript
Read the full transcript 9 turns
Hostdoes the department review captives built around real estate or property differently than one's built for
Fenhua Liucasualty risk? Real estate is a type of industry. We have many different types of industry in Connecticut. So far we have 112 captive
Fenhua Liuentities already. It could be a cell owned by real estate business or a company could be owned by real estate company. So again, it's just part of
Fenhua Liuparticipating or insured industry or company in real estate. So typically we treated each application differently based on the risk profile it has, not based on the industry. For example, if they have enough capital to pay the claims, what's the aggregate limit? They're going to keep up limits. Do
Fenhua Liuthey have a fronting carrier? Who owns the risk? Do they have a regional companies? It all depends on the risk profile, not depends by the industry they come
Hostfrom. It's more important the individual captive applicant or company rather than the actual
Fenhua Liuindustry
Fenhua Liu. Does that make sense? Yes, exactly. But I do agree each industry have a different risk exposure or different risk management needs. That might be a little different but overall the philosophy is the same. We look at physically studying, look at how the premium was generated, it's very sound data, cover the governance and the service provider are very qualified and they know what they're doing. So basically
Fenhua Liuwe're trying to find more responsible partners to work
Citations
Sources
- Captive Insurance Regulation, Connecticut Insurance Departmenthttps://portal.ct.gov/cid/mission-and-divisions/captive-insurance
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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