Does a regulator treat a real estate captive differently?
The review follows the risk profile, not the industry
Fenhua Liu says real estate is simply one industry among many in a book of over a hundred captive entities, and that the department treats each application on its risk profile rather than on the sector behind it. What it reads is the same list every time: whether there is enough capital to pay claims, the aggregate limit and sub limits, whether there is a fronting carrier, and who owns the risk. She does allow that different industries carry different exposures and risk management needs, while the review philosophy stays the same.
The answer is a clean no, and the reasoning behind it is more useful than the answer. Liu points out that real estate already appears in Connecticut's book in more than one form: a cell owned by a real estate business, or a captive owned by a real estate company.
So the question of whether the department has a real estate policy has an easy answer. It has an application policy, and real estate applications go through it.
Key takeaways
Connecticut assesses each captive application on its risk profile rather than on the industry the owner comes from.
The department reads capital adequacy against claims, aggregate and sub limits, whether a fronting carrier is involved, and who owns the risk.
Liu allows that industries carry different exposures and risk management needs while the review philosophy stays constant.
What the department reads is the risk profile. Liu lists it: whether there is enough capital to pay the claims, what the aggregate limit and sub limits are, whether there is a fronting carrier, and who owns the risk.
None of those questions changes if the owner runs apartment buildings rather than a manufacturing business. They are questions about the programme, and the programme is what is being licensed.
From the conversation
Fenhua Liu
Assistant Deputy Commissioner and Director of Captive Insurance, Connecticut Insurance Department
“we treated each application differently based on the risk profile it has, not based on the industry”
This answer begins at 19:48 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive Insurance Regulation, Connecticut Insurance Departmenthttps://portal.ct.gov/cid/mission-and-divisions/captive-insurance
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