Since the beginning of the year, Jennifer Santiago has been the new president of the Risk Insurance Management Society (RIMS). As an experienced risk manager well accustomed to captives and the benefits they can provide as a risk management tool, Captive Review sat down with her to discuss the state of the captive market and where it goes from here

Please introduce yourself and explain your current job and past experiences working in the risk management industry?

Jennifer Santiago: Of course. My name is Jennifer Santiago and I am serving as president of the Risk Insurance Management Society for 2023. I am also the director of risk management and safety at Wakefern Food Corp, which is the largest retailer-owed cooperative with over $18 billion in revenues. I have been working in the risk management industry for over 20 years in various industries such as healthcare, pharmaceutical, manufacturing and higher education. Each company was very different in size and financial structure – public, private and not-for-profit. Some of my previous employers have included NYU Medical Center, Novartis Pharmaceutical and Penn State University. My career experience spans operational and enterprise risk management, crisis management, ethics and compliance, as well as insurance risk financing in which most of my career has included working with captives.

What are your current job responsibilities with regard to captives as well as your past experience working with them?

I have been fortunate to work with captive insurance companies since my first risk management job at NYU Medical Center, which was part of a group captive of NYC hospitals. It was tremendous to have that early exposure to self-insurance and alternative risk-transfer methods. I reported directly to the chief financial officer, managed a team and was heavily engaged with our captive manager. In subsequent roles, I have helped set up, manage and wind down captives in various domiciles. I was president of the captive at Penn State University and, in my current role, I oversee an association captive.

Why did you want to become president of RIMS? What would you like to achieve while at the helm?

It’s been an honour and a pleasure to serve on the board of directors of RIMS for several years. I have been engaged in various roles at the society level and the executive committee, and it’s great to be able to contribute and raise the voice for risk management.

I am looking to build on RIMS’ 70+ year history of engagement, education and advocacy for the risk management profession, with a keen focus on:

• reuniting as a community;
• understanding the needs of rising risk professionals;
• focusing on diversity and inclusion in our industry with our industry partners and companies;
• creating more opportunities for risk professionals to assume chief risk officer roles and take active seats on the boards of public, private and not-for-profit organisations.

What would you like to achieve specifically for the captive insurance space while president of RIMS?

RIMS’ strategic priorities are focused on risk management education and we need to make sure all risk professionals understand the many tools available for the enterprise risk professional to identify, mitigate and manage risk to achieve organisational objectives and overall success. Risk financing is an important part of the risk professional’s toolkit and captive insurance provides an alternative risk financing solution that can support an organisation’s ability to seize opportunities and innovate.

What are your thoughts on the current state of the captive industry? On both the US captive industry and the global captive industry as a whole?

There is a potential to see more growth, innovation and creativity in the captive industry, like many other industries that have fully digitised and embraced operational efficiencies, post-covid-19. Also, like other industries, there will be some retirements of senior leadership at the state level and within the captive industry, which will open the door to new perspectives. The hard insurance market has definitely prompted more interest in alternative risk financing options like captives. As insurers require higher self-insured retentions and capacity is challenged, captive insurance provides a nice alternative option for the transfer of risk.

Delaware’s amendment to their general corporation law, which authorises the use of captive insurance to protect current and former directors and officers for non-indemnifiable losses, is a big win for the industry and could drive more growth there. States may look for ways to become a more favourable and friendly domicile of choice. For risk professionals, it is always great to have choices.

Globally, it’s good to see what France has recently done in opening up their captive legislation in response to the challenges in the insurance and reinsurance market. Given the evolving risk landscape, having an alternative solution to address unmet needs in the marketplace is extremely beneficial. Perhaps other countries will follow suit after seeing what France has done.

Do you think captive growth rates will continue at the same rate in 2023? Where will most captive growth be coming from this year and why?

As risk becomes more interrelated and systemic in nature, all signs seem to point to continued growth in the captive industry in 2023 and beyond. I can see captives being an important risk-transfer vehicle for cyber and property-related risks. Also, continued growth in third-party risk opportunities like warranty insurance, contractor general liability and employee benefits.

Does the captive insurance industry have an image problem? If so, is there anything that can be done to change it?

I am not sure about an image problem. Some organisations may not see the true benefit of establishing a captive and are comfortable running potential uninsured losses through their financials. There is work associated with the set-up: ongoing maintenance, financial, legal, tax and regulatory requirements that may seem like a hurdle, but, having worked for organisations that ran very effective and useful captives, I think the benefits can outweigh that effort. There are always unknown risks, where organisations may need to rely on their own balance sheet for protection. However, for emerging risks that have known potential but the time to impact is unknown, and for gaps in coverage due to insurance exclusions, captives can be an effective tool.

What do you think are the other main challenges the captive insurance industry will face in 2023?

With the increased frequency and severity of catastrophic level losses and insurers and reinsurers pulling back on certain risks, there should be a marked or at least steady increase in captive formation. Domiciles need to be ready and able to handle this influx in a timely and efficient way. That seems like a good problem for the industry to have. There may continue to be challenges on micro-captives and their stated purpose. Additionally, there is always potential for regulatory and tax challenges, which are critical components to fully understand, incorporate and adhere to when setting up a captive.

For each of these challenges raised, what is the best approach you think captive owners should be taking to solve them?

It’s important to identify the problems you are looking to solve when considering forming a captive. Once you are clear on your why, you want to be clear on all the financial, legal, regulatory and tax requirements that are critical to setting up your own licensed, regulated insurance company. Working with qualified service providers is important to assure compliance. Risk managers are always focused on the importance of identifying risks and opportunities with new initiatives, product lines, projects; there is no profession better suited to help their organisations understand the risks and benefits to setting up a captive.

Are US risk managers making best use of their captives?

There is always opportunity for more organisations to learn about captive insurance companies and how they can be an important part of your overall risk profile and risk management strategy. Every risk professional should have an opportunity to interact with and learn more about captives at their organisation; it’s an important skill set to have.