A panel of captive owner representatives yesterday said Bermuda was meeting their needs as a domicile and saw opportunities for expansion of their captives’ businesses.
Scott Reynolds, chief executive officer of Member Insurance Ltd, said his captive, which specialises in insuring hardware store owners, would choose Bermuda again if it had to start over.
“It’s the most robust, mature domicile there is, filled with bright people who understand what we do,” Mr Reynolds said.
“In just a short walk around the block in Hamilton, you can meet all the service providers you need.”
Mr Reynolds was speaking on a panel during the second day of the Bermuda Captive Conference at the Fairmont Southampton yesterday.
Kathryn Henshue, general counsel for FAC Services LLC, which services 1,100 employees at engineering, architectural and construction services firms in the US, said: “The service providers are excellent and everyone’s right here in the district and it makes things easy.”
Ms Henshue added that her company’s captive was still very relevant and could become more so amid the uncertainties of the next few years. The US economy is strong, she said, but when things take a turn for the worse, professional liability claims would tend to climb.
With Brexit looming, trade disputes ongoing and healthcare costs soaring, the captive was a source of comfort, she added.
David Erickson, president of Covenant International Insurance Company and general counsel for non-profit senior living provider Covenant Living Communities, said he had recommended Bermuda as a domicile to another organisation looking to set up a captive.
“When they got back they gave me some feedback,” Mr Erickson said. “They were blown away by the level of professionalism of all the service providers. They validated what we have believed all along, that Bermuda is the right place for us.
“With litigation increasing and premiums rising, our captive is going to be more relevant to us than ever.”
Jennifer Blair, global risk and insurance manager for Bose, said the audio electronics specialist set up its captive in Bermuda a year ago. Service providers including Granite Captive Management, PwC Bermuda and Conyers had helped to “get the captive where we needed it to be” in a very short time, she said.
“We see a lot of growth potential in the captive and we see it as a risk financing tool,” she added.
Mr Reynolds said Member Insurance covered predominantly hardware stores but had opened up to more co-operatives and associations throughout the US “by demand”, a source of ongoing growth.
One of the risks particular to the hardware store owners his company insured was the potential for lawsuits related to chemicals they sold.
He gave the example of Monsanto’s weedkiller Roundup, which was on the wrong end of a $2 billion civil case judgment involving a couple who claimed their cancer was caused by the product’s active chemical, glyphosate.
California “Proposition 65” requires businesses to advise customers about a list of nearly 900 potentially harmful chemicals, many of which are present in household products.
“California leads the way in irresponsible, ridiculous, stupid legislation,” Mr Reynolds said. “Legislation gone rampant is something we have to deal with and for the captive, it presents some opportunity, because it creates additional risk management.”
All the panellists said cyber-risk was a growing issue, particularly ransomware.
Mr Reynolds said more than five per cent of members were now buying cyber coverage, a risk which was not yet going through the captive, but this was under discussion.
Moderator Grainne Richmond, vice-president of Dyna Management Services Ltd, asked the panellists for their views on Bermuda’s temporary presence on the European Union’s tax blacklist this year. The island’s two-month stay on the list, related to a “drafting error” in economic substance regulations, ended when it was removed by EU finance ministers in May.
Mr Reynolds said: “My reaction was surprise and very mild concern. I know that the regulation in Bermuda is sensible and transparent — no concerns there, really. So I wrote to our captive manager and asked what was going on.
“They told us that the problem was minor, but significant enough that it got Bermuda on the blacklist.
“I spoke with our board of directors and they felt the way I did, that there was no need to overreact. We were told it would be remedied and it was.”