PARIMA founder and outgoing chair Franck Baron speaks to Captive Review about the development of the captive market in Asia-Pacific, his own captive programme as chief risk officer at International SOS, plus his aims for risk management sector associations, having recently been named president of IFRIMA

Captive Review (CR): Could you please introduce yourself and give us some background on your history in risk management and captives?

Franck Baron (FB): I am the chief risk officer of International SOS, a world leader in the business of saving lives and protecting organisations from health and security threats. I lead the organisation’s risk and insurance department, encompassing general insurance and employee benefits, captive management, in-house broking, and enterprise risk management (ERM). In addition, I am the founding chairman of PARIMA (Pan Asia Risk and Insurance Management Association), which represents all risk professionals from Asia Pacific, and I have also recently been appointed president of IFRIMA (the International Federation of Risk and Insurance Management Associations).

CR: Can you tell us about the captive strategy you’ve deployed at International SOS and why this strategy works?

FB: We have a captive domiciled out of Singapore. We are licensed for both insurance and reinsurance business and for life and non-life risks. Our portfolio includes risks corresponding to our very comprehensive licence. It fits our group risk-financing strategy by providing the necessary financing capacity to support our risk appetite, while also complementing the gaps we find within the commercial insurance markets. As well as this, it supports our risk prevention priorities and investments, thus making it an integral part of our risk financing strategy.

CR: How did the International SOS’ captive programme respond to the pandemic?

FB: Our captive is involved in our employee benefits and medical plans, and was able to provide the necessary flexibility to adapt to local restrictions and provide the complementary coverage needed to ensure proper care to our employees worldwide.

CR: Are there any recent or upcoming changes you will be making to International SOS’ captive programme, and why?

FB: The deployment of our ERM programme is increasingly highlighting the need to expand our risk-financing capabilities, as well as the restrictions of the commercial insurance markets. Our ongoing initiatives include two top priorities. Firstly, having a very strong data management agenda to develop data-sharing protocols with our ecosystem and generate the analytics needed to improve our risk management. Secondly, the development of our ESG plan to support our group sustainability strategy, as a recent signatory to the United Nations Environmental Programme Finance Initiative (UNEPFI).

CR: Why did you decide to become a signatory to the UNEPFI, and why do you believe more captives should sign up to it?

FB: There is a great opportunity out there for captives to link risk-financing capabilities to ESG/sustainability strategy. And the UNEPFI is a way to officially and tangibly achieve this. Risk management has a role to play in this.

CR: How else do you plan to utilise the captive as part of an overall ESG risk strategy?

FB: The captive can be utilised for funding ESG-related initiatives, adapting our underwriting strategy to meet our ESG goals and adapting our placement needs with both ESG-compatible insurers and reinsurers. You’ve recently announced you’ll be stepping down as PARIMA chairperson at the end of this year after setting up the trade body 10 years ago.

CR: How has the Asia-Pacific risk management community progressed in this time and in particular its attitude towards captives?

FB: The state of the Asia-Pacific market varies a lot depending on the country you focus on, from very sophisticated and developed in countries like Australia, the Philippines, Japan and Singapore, to more basic in other countries. However, there is a growing appetite for captives across the Asia-Pacific region, mostly fuelled by the commercial insurance market’s evolution. There is definitely a flight towards greater risk management maturity and risk-financing sophistication as companies are gearing towards stronger resilience.

CR: What role can PARIMA play in continuing to support the growth in the Asia-Pacific captive market?

FB: In order to assist in the evolution of the captive market, PARIMA has been supporting the ongoing creation of an Asia-Pacific captive owners’ association, which will soon be crystallised by the formation of a Singapore chapter that will happen in the coming months.

CR: Can you tell us more about this Asia-Pacific captive owners’ association, how it came about and what it hopes to achieve?

FB: It is designed to be a not-for-profit association for the owners of captive insurance companies. Our key objectives are to expand the use of captive insurance to drive business success, create dialogue with fellow members, represent captive owners with regulators, focus on attracting and retaining sector professionals, support resilience through climate change-related risk management, and provide an open platform for members/potential captive owners/experts from insurance companies and brokers. Our vision is to champion best practices, foster collaboration, promote understanding of captive insurance, and develop a strong and impactful association for the captive industry in Singapore and Asia-Pacific.

CR: What will be your role in the APAC captive owners’ association, and will it extend to other domiciles outside of Singapore?

FB: I will be a member of it as a captive owner, but the association will be led by other captive owners. We start with Singapore but are aiming to extend it gradually to other captive domiciles across Asia.

CR: As the new president of IFRIMA, what do you hope to achieve in the role?

FB: IFRIMA will develop in a few strategic areas, which will include the below:

1. Enhancing our dialogue facility among association members.
2. Enforcing a collaborative approach by developing a sharing platform of members’ initiatives to support the less-resourced members, which will include thought leadership, tools, reports, surveys, and so on.
3. Providing coaching resources, support and guides around good practice to local communities who are expressing the willingness to establish/develop a local risk-management association in new territories such as South America, Africa and the Middle-East.
4. Facilitate the debate and raise the voice of our community on global critical issues, such as climate change/ESG, tech and data, insurance markets, education, and global standards.

CR: What can risk management trade bodies be doing to better support thriving captive industries?

FB: There is definitely a need to champion better at local jurisdictional level the need for a supportive legal environment towards domestic/ onshore captives. Resilience also means strengthening the risk financing capabilities of companies, so they can pool the risks on their own balance sheet more effectively over time. Here too, taxation must be an incentive. This should allow them to strengthen their equity capital through risk-retention provisions, so they can face future shocks with this resilience-based capital. Companies must be able to use their insurance and reinsurance subsidiaries with full legal and tax security.

CR: PARIMA recently agreed to roll out the RIMS-CRMP certification programme in Pan-Asia. How will adopting this programme help the progression of risk management in the Asia-Pacific region?

FB: This collaboration is helping PARIMA to muscle up our ability to bring a robust education and certification across the region. It’s a great example of a fantastic collaboration between two associations.

CR: What would be the benefits of having an aligned risk management framework that is globally recognised around the world, and is this something you hope to achieve?

FB: This will not happen in the near future. A few standards co-exist such as COSO and ISO 31000. The key point is to bring this knowledge to all risk practitioners so they can make a conscious decision in terms of which standard or reference works best for them and their organisation.