Overview

A cell captive insurer is an insurance company comprising of various “cells” which are “ring-fenced” by means of different class of shares in the insurance company.

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A cell captive is a contractual arrangement entered into by an insurer with a cell shareholder, whereby the risks and rewards associated with certain insurance activities accrue to the cell shareholder.

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Cell captive insurers allow clients (cell owners) to purchase non-convertible preference shares in the registered insurance company which undertakes the professional insurance management of the cell including underwriting, reinsurance, claims management, actuarial and statistical analysis, investment and accounting services. The terms and conditions are governed by the shareholders agreement.

 

The “cell owner’s shareholders” are responsible to capitalise these cells in line with the regulatory requirements as calculated by actuaries of the underwriting insurer.  The cell owner is entitled to dividends determined by the insurance business and approved by the underwriting insurer’s Board.

 

• Third party cell captives sell insurance to the public or other third parties for purposes of producing a profit.

• This can take the form of “affinity” which relates to an insurance product that is ancillary to the company’s main business or

• it can take the form of an insurance product where the company has specialised knowledge in underwriting this type of risk and can take the form of an underwriting manager (UMA) house in a cell captive (the UMA capitalises the cell)

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Cell captive consulting services

Evening Flame assists in determining the viability of setting up a cell captive by assisting in building the business case and financial model. Should the cell captive proposal be viable and you decide to go ahead to set up the cell captive we will assist with the following:

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• Writing of business plan for FSP registration pruposes and the market the cell captive to the cell captive insurers

• Product design, pricing models

• Calculation of capital requirement and optimisation.

• Development of documentation such as policy wording, schedules, marketing material

• Sourcing of outsource partners as required for policy administration, premium collection and software solutions for affinity cells which ensures compliance with regulations.

• Support in developing of business processes such as claims and complaints etc.

• Structuring the business to ensure regulatory compliance and where required FSP applications.

• Approach and secure facilities with relevant insurers.

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We market the cell captive to the relevant insurers and manage the due diligence process with the insurer.

Evening Flame can assist in the entire process to getting your cell captive up and running.

 

​Management of the cell captive shall entail but not be limited to:

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Monthly management meetings

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• ​Set up of meetings

• Ensure all relevant documents are prepared and distributed timeously for the above.

• Data analysis to determine trends and set strategy to grow the business.

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Interaction with the cell captive insurer on information requests regarding the cell captive including

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• financial

• tax and

• regulatory requirements

• Provide updates with regards to regulatory changes.

 

Management of the binder holder to ensure

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• ​Policies are issued on time.

• Policies are issued with the correct wording.

• Guarantee certificates are issued on time and are correct.

• Policies and guarantee certificates are sent out by registered post.

• Ensure initial pricing model is drawn up and approved by the cell captive insurer.

• Ensure the quoting system correctly applies the pricing model.

• Pricing reviews are done as required but at least once in two years.

• Ensure reports on data requirements are sent to the insurer timeously and in the right format.

• Ensure reporting on growth and trends are received timeously from the binder holder.

• Review of policy wording and ensure updates are done as required and correctly incorporated on the binder holder’s system.

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If required define and managed a marketing campaign that will ensure growth in the numbers with the purpose of growing the book.

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Report back on the above as required.