Owning a captive insurance company has put more emphasis on developing and improving risk management initiatives at Lancaster County Solid Waste Management Authority (LCSWMA), according to CFO Dan Youngs.
LCSWMA established its Vermont captive, Sustainable Assurance Company in January 2021, in response to the hard market and speaking on the Global Captive Podcast at the VCIA conference last week, Youngs said now in its third year of operation, the captive has been a success.
“We formed the captive somewhat out of a desperate situation,” he said.
“We have power generation facilities and those facilities are not too appealing to underwriters, so we had a collapse in the capacity to underwrite us.
“The captive proved to be a very viable solution for us and having a strong liquidity position, financial strength of the parent company, it really made sense to go this route.”
The captive is now underwriting $850m of LCSWMA’s property and it is considering adding medical stop loss and an excess layer for cyber in the future.
One the big impacts made by the captive, however, has been the focus it has put on risk management within the organisation.
Youngs said risk management is now one of LCSWMA’s six key pillars for success, but previously “it was two words we never really talked about”.
“We’ve hired in staff around risk management,” he added. “Obviously we have skin in the game now, but it’s at the forefront of our thought and I think, at the end of the day, that that makes us a more resilient business.
“And not just the human element, safety side of our business, but reputation risk, brand risk, all those things that play a part into our success as a company.”
Youngs said having the captive has also given the organisation more “credibility and leverage” in the insurance market.
“It forced us to hone in on a lot of procedures and processes that we can now speak to those commercial markets, the reinsurance markets, at their same level, in the same language perhaps,” he said.
“It shows the investment of our management team to those underwriters and it has brought markets to the table that maybe previously had no interest in us.”
Listen to the full interview with Dan Youngs, CFO of LCSWMA, in GCP #90 on the Captive Intelligence website here, or on any podcast app. Just search for ‘Global Captive Podcast’ and hit subscribe on your podcast app of choice.