The founder and chief executive officer of the Rainmaker Group, Gabriel Holschneider leads a firm concentrating on reinsurance, risk management strategies, and actuarial consulting. A leader in his field, Gabriel Holschneider often shares his expertise through interviews, industry conferences, and panel discussions.
In March, Mr. Holschneider participated in a panel discussion about the state of captive insurance in Latin America. Held during the CICA 2018 International Conference, the panel included other industry leaders, including the president of Quest Management Services, Nicholas Frost, and the principal of Actuarial Factor, Esperanza Borja Mead.
A sophisticated risk management strategy, captive insurance generally pertains to a situation in which a company owns the insurance firm (the captive insurer) that protects it. While captives offer increased control and benefits not otherwise available with traditional insurance, these benefits come with additional risks. Some countries have established rules and regulations limiting the use of this instrument.
Such is the case in Latin America, where many countries have developed so-called “double fronting” rules. Under these regulations, if a captive insurer is not registered in a country, then a company must use a registered local carrier and reinsurer. The policy can add substantial costs in the form of a premium for each fronting. The regulation particularly hampers smaller companies, which may not be willing to jump through hoops to cover the costs associated with it.
The panelists pointed out that less than 3 percent of the $90 billion in annual global captive premiums come from Latin American companies, perhaps a result of these onerous regulations. However, Mr. Holschneider stated that as the economies in Latin America continue to grow, there will be an increased need for sophisticated risk strategies in the region, such as captive insurance.
