EIA Risk Solution (Cell Captive)
INTRODUCTION:
The well publicized success of existing short term cell captive insurers has created a greater awareness of the alternative risk market in South Africa. In terms of net premiums written, cell captives have consistently outperformed traditional insurers over the past three years and as a result given the sheer size of the assets controlled by major corporations in South Africa, we believe EIA Risk Solutions have the unique range of skills and resources to manage a specialist alternative risk transfer operation and unlock the potential within certain Corporate Companies within South Africa.
The principle reason provided for the formation of captives by many companies is to reduce their overall insurance cost. There are a number of elements to this:
1. Elimination of the third party insurer’s profit margin and recovery of overheads / marketing etc. expenses.
2. Poor performance of other companies. Despite having a good insurance record a company’s premiums may also be adversely affected by the poor performance of other companies.
3. Some companies have had little choice but to form a captive simply because insurance cover is either not available or only available at an unacceptably high cost.
4. Transparency. In addition to a simple reduction in costs, a captive can also make the true cost of a company’s risk management capability apparent to line management. In turn, this awareness can result in a better effort to control and reduce these costs by management.
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PRINCIPLE ACTIVITIES OF EIA
EIA Risk Solutions provides risk management and insurance broking services to clients, which include:
1. Corporate Risk Management Consulting
• Design and development of risk management programmes;
• Development of risk management policies and operating procedures;
• Risk financing – self insurance involving the latest available techniques.
2. Captive Feasibility Studies and Captive Management
The formation of an insurance company represents a major investment of time and resources. To ensure that the sponsoring shareholders achieve a satisfactory return, and that the insurance company adds value to the longer-term risk financing strategy, it is essential that the fundamental issues are evaluated with precision at the outset. These are addressed in a Captive Feasibility Study.
3. Risk Administration Services
• Policy and premium administration
• Claims settlement and payment facilities;
• Management of the client information, policy information and claims data to insure a consistent and efficient administration off all insurance processes.
EIA RISK SOLUTIONS SERVICES – DOING THINGS DIFFERENTLY
EIA Risk Solutions recognizes that many risk products can be sourced from our competitors or directly from markets themselves.
Therefore we know that how we work at achieve our client’s objectives is vital to our success. To do this, we differentiate ourselves in these ways:
1. The team you meet will be the people responsible for managing, consulting and servicing your account.
2. Our programme structuring methodology allows us to use innovation and creativity in the search for risk financing opportunities and optimum solutions.
3. We enthusiastically promote true partnerships between our clients and their insurers and deliver realistic, open advice.
4. We have an experienced and tenacious claims broking resource and can offer specialist consulting services to assist in the formulation and negotiation of the most complex claims.
Many clients recognize the added value achieved from treating their broker/consulting partners as an extension of the in-house insurance team, to facilitate development of an overall strategy, advice and assistance on global marketing efforts and grow meaningful relationships across all lines of business. We are most comfortable with this way of working.
We appreciated very much the fact that clients are directly and deeply involved in all corporate insurance policies and programmes negotiations with local and global insurers and re-insurers. Working closely with you, we will advise and assist in analyzing risks, quantifying them, developing strategies, programme structures, policy wordings and risk controlling. Most of the team members do have long standing insurance, reinsurance, advisory and broking experience.
SUMMARY
The cell concept enables Corporates to insure its risk exposures through an equity participation in an Insurer. The benefits we believe are numerous. The cell captive concept encompasses a solution that effectively brings together a partnership between a Corporate and an Insurer represented by EIA Risk Solutions. BLK must ensure that a robust, efficient and cost effective support infrastructure-this support infrastructure is fundamental. EIA Risk Solutions will ensure that all the relevant technology is in place to deliver an effective, efficient service.