How Quality Data and Trust Can Drive Success for Captives

By: Charlotte Harrison

Captive insurance is a dynamic market where each captive operates with its own distinct needs and circumstances. In my role as Head of Carrier & Market Relationships at Gallagher Bassett (GB) UK, I've worked closely with many captives to deliver successful claims management programmes. From my time in the industry, I have identified two key drivers of success: quality data and partnership.

With the right insights and the expertise of a trusted partner, decision-makers from captive insurers can leverage these two factors to succeed. I recently sat down to discuss some examples of how quality data and partnership can be effectively applied to the captive market with Andrew Sewell, Gallagher Bassett UK technical director — Client Services.

1. Best Practice Data Management

There are pressing issues with data capture, accuracy, and integrity across the captive arena. Understanding the available data is crucial for captives to consider before making decisions on pricing modelling, indicating a need for better data access and transparency. Captive managers may be unaware of the full extent of the claims data available to them, which can vary based on different captive models (in-house or outsourced) and sometimes rely on manual processes.

On data management, Andrew Sewell shared, "Captives often have access to financial claims data but not necessarily data relating to claims performance metrics. However, both are essential for considering the overall programme, and enhancing the availability and understanding of all available data can significantly improve decision-making processes."

2. Unlocking the Tremendous Potential of Claims Data in Predictive Analyses

While there's a focus on large or major losses, there's also a need to consider attritional losses in the context of understanding the overall picture and emerging risks.

Captives can face into this challenge by widening the lens and using data to inform decisions, with captives increasingly being looked to as a risk solution for emerging risks, not just standard lines. As a result, predictive analytics is gaining interest as a supporting tool for capital allocation and decision-making, though some scepticism remains due to data protection concerns and variance in captive data pricing models.

3. Risk Management in a Demanding Regulatory Environment

Aligning objectives across different jurisdictions can be challenging for captives, highlighting the need for collaboration towards common goals. Regulators are consistently applying pressure on insurer's data handling practices. Conversely, the wealth of data available within the captive market may help inform and address regulatory challenges more effectively.

The importance of root cause analysis in risk management cannot be understated. By asking "why," we can understand underlying issues and improve strategies.

In my conversation with Andrew, he reiterated the need for attention to detail in the captive market and the importance of focus on individual business lines. "Each captive has its own unique characteristics, and throughout my career I've found that a deep understanding of these unique characteristics can influence how successful a programme will be. At Gallagher Bassett, we take the time to understand the individuality of each of our captive clients, as every insurer — whether they are self-insured or a traditional model — has a fundamental need for effective risk management."

How Can a Trusted Partner Assist in the Captive Arena?

Captives can benefit greatly from partnering with a claims and risk management provider, from leveraging the provider's existing technology and experience with data capture, to scaling by accessing a broader team of experts. At Gallagher Bassett, we build trust with our captive partners by providing claims solutions that drive efficiency and can be applied at scale. We have found this approach especially beneficial for captives where structural limitations may make efficiencies in claims handling and processing more difficult or costly to establish. By leveraging Gallagher Bassett's extensive experience and technical expertise, we help captives deliver superior claims outcomes even in complex environments. Our dedicated claims managers take the time to understand your circumstances and identify the right solutions.

By building this deep understanding of our client's needs, we've strategically invested in developing bespoke teams. Andrew highlighted our client services capabilities that might be most useful in the captive space, "our burst resourcing and legacy claims solutions — offered through our Consultancy Solutions division — are home to dedicated claims management experts with experience in deploying rapid responses to major events and resolving legacy claims books to ensure our captive or insurer partner can focus on the future. Our flexible and reliable services allow clients to focus on growing their core business while trusting Gallagher Bassett to manage those peripheral challenges like resourcing and talent development."

Gallagher Bassett is well positioned to look after captives, offering a combination of expertise, comprehensive services, and a commitment to superior outcomes.

For more information about our capabilities and how we can support your captive insurance needs, contact us.