(a) The captive insurance company, or attorney in fact,
must designate individuals to form a governing body. Collectively,
the members of the governing body must have the ability and experience
necessary to oversee the captive insurance company's operations. The
ability and experience needed will vary with the size and complexity
of the captive insurance company's operations.
(b) The governing body is responsible for the following:
(1) establishing and documenting the internal control
procedures used by the captive insurance company, or attorney in fact.
If a captive insurance company, or attorney in fact, uses an affiliate's
procedures, the governing body must review the procedures for appropriateness
and modify where needed;
(2) documenting a conflict-of-interest policy and procedure,
and monitoring it to verify compliance;
(3) overseeing all entities providing captive management
services to the captive insurance company;
(4) monitoring counterparty risk, which could include
banking institutions and reinsurers;
(5) setting the captive insurance company investment
policy; and
(6) managerial control, insurance information, and
compliance with the Insurance Code and department rules.
|