If you look at the genesis of many software programs designed and developed to manage captive operations, you will find that most companies start with an originating premise, and then discover that, to broaden their market, they bolt on broad functional areas that ultimately must work together.
In the prehistoric days of software (somewhere between 1980 and 1990), insurance company software seemed to gravitate to accounting, where the control of cash receipts was the greatest concern along with aggregating data for reports. Out of that sprung general ledger programs, and out of those evolved underwriting functionalities that could ‘feed’ data into the general ledger; then claims management tools soon followed. Other companies started from an underwriting or policy control standpoint; still others from the claims arena. Traces of those originating concepts can be found in that software today. In many cases, it all looks seamless and works well enough, though some pieces of the functionality are more intuitive than others. Perhaps this is because of the designers’ knowledge bias, or perhaps because so much time was spent on one area of functionality that little of the budgeted project time was left to devote to other core functionality.
We turn now to the captive manager. Many captives are straightforward: a spreadsheet, an accounting program and some Word templates and one is good to go. Then regulations change, and the number of simple captives is multiplied by fifty or one hundred. And then new captives are added that are more complex, with multiple insureds that need individual rating, or with protected cells or specialty cells. Policy forms become unique, and the processes grow in complexity along with the risk distribution. Now the captive manager is managing thirty, fifty or two hundred and fifty, with all the regulatory reporting, all the industry requirements, myriad of forms, actuarial reports, risk distribution reporting and documentation, along with, still, safely collecting premiums.
For those captives that have attempted to cope with existing routines, the countless administrative tasks bury them for much of the year. Some have installed software whose originating purpose was for single companies and tried to adapt it to their situation; others have found that software designed for agents and brokers gets them, say, 80% of where they need to be. It’s not great, but it works for now.
Captive managers need software designed with the originating premise of managing multiple insurance companies, yet there are very few software companies with that foundation. This is because for most companies developing insurance software, the real money is with large insurers that can pay millions of dollars for their core systems, not with captive managers who often have the same complexity but much smaller budgets.
Captive managers know they should have software that helps them manage the core principles of their business: multiple companies covering many coverage and risk arrangements that often defy conventional insurance processes. Existing software platforms are expensive because it’s tough to build adaptable and affordable software that can manage many companies, many coverages, and many risk arrangements for a market that numbers hundreds, not thousands.
There are a few companies out there, though, and we at Megalodon are one of them. Fully functional, highly adaptable software at a price that can work within a captive manager’s budget. It’s a novel approach. Give us a call to learn more.
~ Bill Montei, CEO, founded Megalodon Insurance Systems with a simple yet BIG idea: provide small and mid-sized insurance companies powerful policy & claims management software solutions at a price that is within reach. To talk to Bill directly, please call: (608) 709-2154.