Captive Managers: Separating the Ordinary from the Extraordinary

Captives, Employee Benefits

Is your captive manager ready to play ball?

Coaching a baseball team of 8- and 9-year-olds this past summer was . . . interesting for me. At this level, the stakes are low, as they should be, and the fun factor is high (or at least I did what I could to make it that way). But even at that age, you can’t avoid the fact that each player sits somewhere along a wide, wide continuum of ability. Take for example this one good-natured kid who started the summer a bit unsteady on the fundamentals: he tried to catch and throw with the same hand (don’t try this at home). Then I had another player who not only had the fundamentals down pat but also brought an intensity worthy of the major leagues. Of course, I didn’t need to have the insight of a professional baseball scout to distinguish the strugglers from the standouts. It would have been pretty apparent to anyone.

It Takes an Expert: Finding the Best Captive Managers

On the other hand, in my role as director of M3’s Employee Benefits Captive Practice, I definitely have applied my professional insight to distinguish the mediocre, unproven captive managers from the stellar ones that M3 has found for our clients. That kind of information just isn’t readily apparent to someone who doesn’t have specialized knowledge of captives. When M3 saw a need to create a captive practice, we wanted to make sure we knew how to measure captive manager performance and identify the outstanding performers. That’s why we made a concerted effort to become an expert on captives. It’s also why we’ve ultimately been able to secure proprietary relationships with exceptional captive managers.

Quite frankly, any broker can bring up the captive idea with a client and then pair it with a captive manager. Unfortunately though, that broker may have done only a cursory amount of research on that captive manager. And that’s a problem because captive managers are not created equal.

The Qualities That Benefit Our Clients

So what are the qualities of the captive managers we work with? First, they know how to be flexible to meet specific captive member needs. They don’t place a member in a captive cell with hundreds of others it has little in common with. In fact, our captive partners create specialized captive cells that are not only smaller, often between 10 and 20 members, but also specialized. In other words, the captive cell members share key similarities like industry, risks, size, and region. And that’s a huge plus to our clients.

Remember, a major reason a company joins a captive is to gain more control and financial independence. Each captive cell member is essentially a co-owner of an insurance company. So if a member is, say, one of 15 owners vs. one of 200, the feeling of ownership is strong—and real. After all, how much pull would a company have in a group of 200, especially if that group is a heterogeneous mix of entities with wildly divergent risks among them?

Proven Players from the Start

So remember that Little Leaguer a little shaky on the basics? Well, he ended up making great progress by the end of the summer. Who knows—maybe he’ll one day be a varsity starter. Time will tell. That’s really the operative word here—time. And when it comes to a captive manager, time is what our clients can’t afford to waste. That’s why M3 wants our clients to start with the best from day one. And it’s why we’ve worked hard to make that possible.

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