Our insurance advice is grounded in thorough understanding and practical experience of insurance operations at both captive and parent levels. We also have a network of non-affiliated expert resources which can provide advice in the following areas:
Our experience spans risk management, underwriting and brokerage, with both insurance and reinsurance expertise. We ensure that our clients’ related party transactions follow proper process and that decisions are made by an experienced underwriter in Barbados.
We ensure that our client’s insurance products have arm’s length pricing and wordings that are drafted to meet client’s objectives. Palm works closely with our client’s to evaluate which risks are a good fit for the captive. We have extensive experience which is valuable to clients to help in risk selection which will result in future profit and fair claims settlement.
Risk transfer to a captive should be done via formal written contracts which look and feel like insurance policies that could be written on an arms- length basis in the commercial market. Each policy should be priced in real time with a premium comparative to the commercial market.
Pricing - Palm provides proposals for contemporaneous pricing and scoping of captive insurance products and supports these proposals with detailed justifications based on discussions with third party insurers and research of the international insurance market place. Palm’s pricing approach is thorough, conservative and robust, which are features that are made possible through our extensive market relationships.
Documentation - Palm backs up our proposals on scope and price with accurate and contemporaneous documentation of the underwriting process, from the investigation stage right through Q&A, to final decision making. We draft insurance quotes, offers, binders, slips, policy wordings and invoices.
We understand the global market place and are able to design solutions that will add value to your captive. From stop loss aggregate solutions to insurance wraps to new markets, we will advise how commercial reinsurance can supplement and support the goals of your captive.
Palm assists captives to create claims procedure manuals that provide clear direction to the captive manager on what steps to follow in the event of a loss, as well as reference information regarding adjusters and other expert resources that may be required in the event of a claim. Palm also provides claims handling expertise, including policy analysis and the engagement and management of adjusters, loss engineers, accountants and claims lawyers.
Palm is uniquely qualified to support the risk management provided by the parent’s insurance personnel. When the captive serves as “Risk Management Hub” for the parent organization, Palm can also assist with running data collection, contract analysis, claims, risk control engineering, fronting, local insurance compliance and other risk management functions from this hub.
It is important that the parent company has controls and procedures in place to ensure that the captive is run well and in full compliance with the parent’s own governance systems. Palm can assist with navigating through the many facets of this process.
The ultimate goal of a captive may be to become the hub of the parent company’s risk management and insurance function. This role can be expanded to include many critical features, including loss control engineering, claims data trending, and other ancillary services.
Each country has different, sometimes complex rules with respect to fronting and the requirement to buy local insurance in country. We have developed an extensive network of local resources in the countries in which our clients operate and can assist captives and parent organizations with this important task.
Palm helps captives attain “substance-in-domicile” by being governed and administered to a standard appropriate for size and the jurisdictions of their Insureds, and by having underwriting and claims decisions made in the domicile by qualified people acting within documented scopes of authority.
We are able to assist captives with governance by helping to: source local board and committee members with the relevant expertise; draft committee mandates, underwriting and claims protocols and pro-forma financials; provide advice about transfer price audits and trial compliance audits; and contributing to business plans.
Underwriting and claims decisions should be made and documented in the captive domicile by qualified people acting within their authority.
Palm has underwriting, management and risk management staff in Barbados and elsewhere and open access to global insurance markets. We help captives define underwriting procedures and scopes of underwriting authority. We contribute local underwriting expertise to underwriting committees to support “mind and management” in domicile.
With increasing scrutiny on captives and the implementation of BEPS, it is more critical than ever that captives can demonstrate that the corporate "mind" resides in the domicile. Directors must be seen to be actively participating in Board meetings and decisions. The formation of committees to oversee underwriting and claims and other important functions helps to ensure that the captive is truly functioning as an independent entity in the chosen domicile.
Captives should be structured with the same robust compliance and governance processes and policies as their parents and other commercial insurance markets. Palm can assist with structuring appropriate guidelines and implementation of process and controls to ensure adherence to the guidelines on a consistent basis.
The captive can expect audits from regulators, tax authorities and internal auditors. Palm offers services to do trial mock audits to evaluate all captive operations, policies and procedures to ensure compliance prior to these audits.
Our client’s organizations are constantly evolving and changing in accordance with strategic plans. Palm works with the parent and captive to adjust the captive portfolio to respond to these changes. Palm can assist with annual captive planning meetings; development of captive strategic and business plans and financial modelling to respond to changes.
What is my captive worth? How can I get more from my captive?
Palm provides captives and owners with the tools to measure the value of captive operations and understand interrelationships between the variables determining value. At the captive level, we weigh a captive’s premium against local overhead, claims expectancy and capital requirements. At the owner level, we also weigh transaction costs and taxes incurred outside domicile, opportunity cost of stranded cash and the parent’s corporate tax dimension.
How can I get more from my captive?
Portfolio valuation is the starting point for Palm’s approach to planning, whether in studying the feasibility of forming a captive, creating guidelines for portfolio management, or devising strategies for growth. Palm works with captives and their owners to devise strategies for achieving long term sustainable growth. The platform for these strategies is an in-depth knowledge and understanding of the owner’s risk exposures and tolerance.
A captive cannot be profitable without the appropriate diversity of products and corresponding exposures. Palm assists captives in understanding what the portfolio should include, and what the short and long term growth strategies should look like.
Captives are not short-term strategies. The benefit of a captive evolves over time, and enables a parent to use a captive as a risk management hub. This objective can only be achieved when there is a clear strategy in place.
I have run out of things for my captive to insure.
We work with risk management, finance and tax groups to understand an owner’s uninsured risk. We are experienced in translating these kinds of risks into the language of insurance and have a network of commercial insurer relationships that enable us to refine and price suitable products, and to validate the captive transaction with due underwriting process, policy language and transfer pricing.
My captive is not profitable.
The challenge for many captive operations is that frictional cost, risk concentration, low margins of conventional insurance and transfer pricing guidelines can combine to stack the underwriting odds against the captive. Palm understands how to translate kinds of risk which are not usually covered by insurers into captive products that warrant better underwriting margins.
Every parent company has exposures that are not insured under a traditional insurance program. Palm can assist parents in taking these already self-insured exposures and creating bespoke insurance products for the captive.
Palm has excellent insurance market relationships that can support robust arms-length pricing and risk sharing for both traditional and non-traditional insurance products for the captive.
For robust transfer pricing on unique insurance products, it is best practice to work with a commercial market to develop terms and pricing and to invite their participation on the program.