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Actuaries urged to follow pricing standards as captive insurance evolves

The white paper warns that when captive pricing decisions lack benchmarks or established methods, the fallout can extend to captive owners and the broader insurance profession.

Reported · Written up by our desk · Industry & Deals

A new white paper from Pinnacle Actuarial Resources, Inc. argues that actuarial pricing discipline is critical as captive insurance expands into novel coverage types that the traditional commercial market cannot or will not provide. The paper says innovation in captive insurance also increases complexity for actuaries who may face risks with no historical data, no benchmarks, and no clear methodology to rely on.

It highlights that pricing decisions made without a proper foundation can create consequences that ripple across the captive, its owners, and the broader insurance profession. Aaron Hillebrandt, principal and consulting actuary at Pinnacle Actuarial Resources, emphasized that actuarial pricing discipline means staying grounded in the Actuarial Standards of Practice, noting the profession is self-regulating through bodies within the American Academy of Actuaries.

The paper frames clear communication and disciplined pricing as key to building meaningful partnerships between actuaries and captive owners. It also points to related risk trends, including how expanding risk complexity can erode confidence among food, beverage, and agriculture companies, and how the cyber threat landscape has shifted rapidly with AI-driven attack capabilities.

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