Using Technology to Improve Captive Management

Kevin Doyle


August 1, 2012

Just as technology can enhance a company's risk management program, it can also provide many benefits for captives. Better software can improve both data analytics that bolster risk-financing decisions and the workflow that supports day-to-day management of the program.

Captive programs with consolidated data and strong analytics can also better market their programs to prospective members and keep current members informed on pricing and premiums. And this same information also helps captive managers strategically manage risk and assist their participants with risk mitigation across the captive.

Data and Analytics
One of the most important functions of any captive program is timely access to high-quality data. Data consolidation can often be a complex exercise for a captive manager. Captives may have multiple member companies and each captive member may have one or more third-party administrators that handle claims. Manually requesting claim data from each member and each third-party administrator, and then consolidating this data into a single format for analysis, can be extremely time-consuming and error-prone.

Today's technology platforms can do this automatically by electronically collecting and consolidating data from multiple sources and then mapping it to a centralized database. This process not only saves time but increases accuracy.

In addition, policy-tracking features allow captive managers to easily manage and monitor claims against a range of policies and coverage types and regularly report this data back to the captive board and its members.

Technology that offers advanced reporting and analytics allows participants to better understand how losses might develop for a set of risks. Increasing access to this information can help members be more strategic and can also help captive managers assess which risks to insure and at what level to insure them.

Day-to-Day Captive Management
In addition to data and analytics, risk management software will have configurable workflow tools and validation rules that direct the handling of claims and financials to ensure that all requirements set by the captive's management are met.

In addition to monitoring and measuring compliance with internal procedures, a risk management system will typically include electronic data interchange (EDI) features that streamline and automate both the government-mandated reporting requirements and the reporting required by excess carriers.

Another benefit to automated workflow is data accuracy. A rules-driven system using common codes and lists will yield information that is complete and accurate, and therefore more useful for strategic analysis and risk financing decisions.

Keeping Members Informed
To support successful oversight and informed decision-making, a captive should provide its members with regular access to accurate, timely data. This transparency will not only improve decision making, but can serve as a differentiating factor that will allow the captive to better retain and attract members.

Most technology platforms are able to deliver this information in the form of dashboards, charts and graphs that aid in understanding and bring important metrics directly to the surface. Some online risk information portals also provide tools that support collaboration between captive management team members, regardless of geography or time zone.

A captive's technology platform can also be used to produce reports that help with operational processes such as calculating member allocations. With a good database of claims and policy information within a technology platform, a captive manager can calculate shared costs across their member companies.

Many technology platforms also support automated communications within the captive. For example, a system can be configured to automatically notify key stakeholders of severe claims, when a policy's limits are approaching or when external weather events are expected to impact a captive member or location. With more information, risk stakeholders within the captive are then better able to respond with effective loss-control strategies.
Kevin Doyle is senior vice president, global specialties for CS STARS LLC.