How Does Captive-as-a-Service Work with Boost?
With the launch of Boost Re, Boost now offers captive-as-a-service as part of our insurance infrastructure platform. Launching a captive insurance program for your business has never been easier, or more cost-effective. This blog is here to explain exactly how it works, and what to expect when you build your captive with Boost.
Step 1: Scoping and Exploration
As a first step to setting up your captive with Boost, you’ll meet with our team to discuss what you’re trying to build, key motivations, and what you intend to do with your new captive cell. We’ll be gathering a wide range of information about your proposed captive, such as:
What type of business your captive will support. Will you be focused on personal lines, commercial lines, or both? What kinds of products? Will there be more than one line of business?
Your planned state rollout. Which states do you intend to conduct business in, and what is your expected timeline for entering each state’s market?
Your anticipated premium volume. How many policies do you expect to sell annually, and at what price point? How did you arrive at these numbers?
Your projected growth over time. How do you expect your program to scale over the course of the next 1-5 years? What factors will most heavily influence your growth trajectory?
Your risk appetite. What level of risk are you comfortable taking onto your balance sheet? How does that influence what kinds of coverage you’re willing to offer?
Once we’ve scoped out what you want to do with your captive, we’ll put together a business plan for your prospective cell.
Step 2: Regulatory Filing and Approval
All captives must be approved by the Department of Insurance (DOI) in their domicile state. For Boost’s captive, the domicile state is North Carolina.
In order to approve your captive cell, the North Carolina DOI will want to see detailed information about your prospective program. The DOI is generally interested in both the business plan for your cell and how the cell’s operational management will be handled. The latter includes things like:
Fronting carrier and reinsurer relationships
Financial projections for the program, including potential losses in adverse years
Proposed investment policy
Composition of your cell’s management board
For this step, Boost will handle all filings and communications with the DOI, including addressing any questions or concerns the DOI may have. Once the North Carolina DOI is satisfied with the cell proposal, they will approve it, and the cell will be incorporated.
Step 3: Capitalization and Collateralization
Once your cell is incorporated, you can begin preparing it to accept business. The most important preparatory step? Adding the risk capital you’ll need to back your offering.
This isn’t as simple as just opening a bank account (although you’ll need to do that too!). The structure of the cell’s capitalization will need to be negotiated with all stakeholders, including any collateral requirements; contracts will need to be secured with fronting carriers; and you’ll need to determine how the cell’s capital assets will be managed. Depending on your preference, Boost can handle all or part of this step on your behalf.
Once the cell is fully capitalized, you’re ready to start writing business! From start to launch, the average Boost CaaS implementation time is 2-3 months, versus the year or more often required to build a single parent captive.
Step 4: Ongoing Maintenance
Once your captive is officially live and your program is generating premium, it’s not the end of the story. An insurance captive is a significant responsibility, and the DOI requires regular check-ins to ensure that everything is staying on track against expectation.
Boost will handle ongoing maintenance requirements on your behalf, including:
Providing the annual Statement of Actuarial Opinion required by the DOI, which assesses the financial health of captive loss reserves
Preparing annual financial statements to submit to the DOI
Managing any audits of the financial statements
Filing required tax forms related to the captive cell
Holding mandatory annual in-person board meetings with the DOI
Offering legal opinions and guidance (via referral) as necessary
Monitoring the cell’s capital and collateral to ensure adequacy
With Boost’s captive-as-a-service, you can gain all the benefits of a captive insurance program at a fraction of the traditional costs and time required. Boost handles the majority of setup and ongoing maintenance tasks, leaving you free to focus on your core business goals.
To learn more about a captive-as-a-service partnership with Boost, reach out to our team today.