A lack of capacity for specific liability coverages ultimately led to Boston-based childcare company Bright Horizons launching its Vermont-domiciled captive back in 2017.
Speaking in an exclusive interview on GCP #69, Gail Newman, vice president of risk management at the company said: “One of the primary drivers of creating our captive was because we started to realise the challenges with the specific type of liability coverages.”
Newman also said that the lack of liability capacity stemmed from issues relating to well-publicised child abuse cases over the past few years.
“While those situations are somewhat different than the nature of our business, it still had a significant impact on capacity availability,” she explaind.
Newman noted that while it’s not “an easy topic to talk about”, being able to obtain and maintain abuse and molestation coverage, is “what we need to run our business”.
“And also because we have a strong list of clients who contractually require it,” she added.
The company has ultimately been able to sustain various excess limits of coverage because its captive has given it more direct control over the risk.
When discussing the potential for the company to use its captive for cyber and D&O in the as premiums rise, Newman said it’s an ongoing consideration.
She said that the decision to use the traditional insurance market comparative to the captive was a “delicate balance” that the company continually evaluates.
Newman added that although the “markets are challenging and premiums are rising,” importantly, the company is still currently able to transfer the risk. However, Newman said that cost savings are “definitely on the radar”.
She also said internal conversations around the company’s captive have delved into exploring how it can be used as a way to innovate within the business “as we grow and take different paths to deal with current economic challenges”.
“And what I mean by that is, we may be entering into new service lines that are new or unfamiliar to the traditional insurance markets and the industry,” Newman added.