What service providers does a captive need?
Three you will always need, more depending on what you write, one resident director
Fenhua Liu sets a competence and character standard first, then names the core team: a captive manager or consultant, a CPA firm for the annual audit, and an actuary for the feasibility study. Beyond that it depends on the programme, and she lists brokers, claims adjusters, investment advisers, tax advisers, risk managers and industry specialists such as an information technology expert for a cyber book. Providers do not have to be located in Connecticut. The residency requirement lands on the board instead: at least one director must be a Connecticut resident.
Before naming anyone, Liu sets a standard. Providers have to be competent and of good character, which in practice means qualified and reviewable. That framing matters because it is the standard the department applies when it approves people, rather than a checklist of firms.
The core three follow from what a captive has to do every year. A captive manager or consultant runs it, a CPA firm audits it, and an actuary does the feasibility work. Those are not optional for a functioning captive.
Key takeaways
Every Connecticut captive needs a captive manager or consultant, a CPA firm for the annual audit, and an actuary for the feasibility study.
Further providers scale with the programme, from brokers and claims adjusters to a specialist where the risk demands one.
Providers need not be located in Connecticut, but the captive needs at least three board members with at least one Connecticut resident, and officers file biographical affidavits.
The rest depends on the programme. Liu's list is deliberately open: brokers where reinsurance is involved, claims adjusters, investment advisers, tax advisers, risk managers, and a specialist where the risk demands one. Her example is a captive writing cyber, which needs somebody who genuinely understands the exposure.
This is the part an owner tends to underestimate when budgeting. The required three are predictable; the rest scale with how complicated the book is.
From the conversation
Fenhua Liu
Assistant Deputy Commissioner and Director of Captive Insurance, Connecticut Insurance Department
“We look at their background, and we give them approval if they meet the requirement.”
Transcript
Read the full transcript 6 turns
Hostmeaning what types of service riders should one plan to have before they look to bring a captive application to you? And are there any requirements for those service fighters to be local to Connecticut
Fenhua Liu? Connecticut required, by law, it requires providers and minimum, for example, the service rider need to be first of all competent and have a good character, and in other words, they need to be qualified. And for those, for example, first of all, they need to have a consultant or capital manager, and they also
Fenhua Liuneed the CPA firm to do their annual audit financial report. They also need to actually look at the, do the visibility study. And if they depends on what kind of issue they may need, they may need brokers. I mean, they may need to claim adjusters, investor advisors, tech advisors, and even risk managers to help them. And also depends on their specific need
Fenhua Liu. They may need specific industry expert, for example, if they write cyber risk, and they may need expert in IT related expert to do the consulting work. So it all depends. We do not need the CPA managers to be physically located in Connecticut. However, for those board members, we may, we need at least one board member to be a
Fenhua LiuConnecticut resident. For those other service providers, like president, secretary, they need to file a biographic affidavit with us. We look at their background, and we give them approval if they meet the requirement. For example, they should not have legal issues of background and criminal background. That's a basic requirement. And then for board members, as long as they need one, they have one in
Fenhua LiuConnecticut, that's enough. The other, they have at least three board members, and the one they need to be a Connecticut resident. That's all it
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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