In December 2023, Captive International published results from a survey conducted with ECIROA on independent non-executive directors in captive governance. The report described perceived benefits of independent judgement and highlighted questions about committee participation. It offers useful prompts for a board review, although the accessible report does not establish a representative sample of the entire captive market. Appointing an independent director is only the beginning of defining how that contribution will work.
Describe the contribution the board needs
A board should be able to explain why it needs an independent perspective and which experience is relevant to its captive. The answer should reflect the actual business and decisions ahead. A title alone does not identify whether the director will be expected to challenge underwriting assumptions, assess financial resilience or scrutinise a proposal involving the parent. The mandate should make those expectations intelligible.
An INED’s concrete role is to bring independent judgement to board decisions and challenge the evidence where necessary. Effective challenge requires timely information and an opportunity to raise questions before a decision becomes a formality. These conditions deserve attention alongside the director’s qualifications. Management and the chair can support that contribution without expecting the independent director to become the captive’s operational manager.
Connect committee work to the decisions
Committee membership should follow the board’s needs and applicable governance requirements. The relevant question is which matters need focused scrutiny and how the result will reach the full board. A committee can provide time to examine assumptions, but its existence does not establish that scrutiny is effective. Terms of reference should identify the responsibility, reporting route and decisions reserved for the board.
For an employee-benefit captive, the information may need to connect benefit design, claims experience and retained exposure. A board paper should make the material relationship visible rather than presenting each function as a separate update. Management can then explain where the data is incomplete and how that uncertainty affects the proposal. Committee discussion should improve the decision record, not merely add another approval to a checklist.
Provide access to evidence
An independent director needs a workable route to obtain explanations from the people responsible for a paper. The board should consider whether material information arrives early enough for questions and whether significant revisions are clearly identified. Late changes can be unavoidable, but their implications should be explained. A concise paper can still show the alternatives considered, the assumptions and the consequences of a different outcome.
Advice from managers and other service providers should also be understood in context. The board can ask what the adviser was engaged to assess, which matters fall outside that work and whether the proposed decision creates a conflict. Documenting a conflict does not resolve it automatically. The responsible parties should explain how it will be managed and how the board can obtain an independent view where needed.
Evaluate the work rather than the label
A review of a director’s contribution should consider the decisions in which the board sought challenge and what happened to the questions raised. Agreement with management is compatible with independence when it follows informed consideration. Repeated disagreement is not, by itself, evidence of effective oversight. The chair should encourage a review that examines the quality of judgement and the conditions enabling it.
The same review can identify a mismatch between expectations and available time. A director appointed for a specific technical contribution may need different information from another board member. Clarifying this can improve the board’s preparation without creating a separate governing structure around each individual. The objective is a collective board able to understand the business and reach reasoned decisions within its responsibilities.
Use the survey as a prompt
Historical survey responses should not become a benchmark requiring every captive to adopt the same committee arrangement. The board’s size, business and regulatory context need their own assessment. The useful exercise is to test whether the existing arrangement gives the board access to independent judgement on material decisions, with responsibilities understood by the parent, managers and directors.
This editor recommends a short annual review of the INED mandate, information flow and committee responsibilities. The record should identify what works and which changes would make scrutiny more effective. The ECIROA survey provides a reason to ask the questions; the captive’s actual decision-making provides the evidence for the answers. A clearly usable mandate helps independent judgement contribute to the board’s work beyond satisfying the reason for the initial appointment.
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