| A Salute to the Friendly Society Restored and those that Make it Possible |
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When former governor Jim Hodges signed the captive law in June 2000, a small group was invited to the historic event. Because John O’Brien had already filed letters of incorporation for the first captive management company in South Carolina,he was among the select invitees that were to be part of the new captive insurance industry in the domicile.
O’Brien recalls insurance director Ernie Csiszar’s immense enthusiasm as he listed three essentials for a successful captive domicile. The first was that South Carolina would need the right legislation and regulatory components supplemented with a qualified and forward-thinking alternative risk regulatory team. Secondly, South Carolina would need to be a place where business could be conducted in a pleasurable atmosphere. Csiszar’s third and final stated essential was that South Carolina would need to create sound infrastructure.
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Seven years on, O’Brien is confident that South Carolina’s legislation is a progressive and viable competitor with other domiciles. “We have had particular success in the enabling of special purpose vehicles for securitization of insurance risk,” says O’Brien. In his view, South Carolina has met the challenges of providing a consistent high-quality regulatory response and oversight to an aggressively growing captive industry. The alternative risk section of the department of insurance has been fortified in preparation for the accelerated growth expected over the next five years and beyond.
South Carolinians feel confident they have achieved Mr Csiszar’s vision of making South Carolina a pleasurable place to do business. “The importance of an attractive domicile cannot be overstated when appealing to potential captive. Form must follow function”, says O’Brien. He believes that the coastal Lowcountry already had a lot of to offer visitors in terms of hotels and shopping, the history and architecture, beaches, sailing, great golf, the finest resorts on the East Coast and all accompanied with the good manners and friendliness that are associated with South Carolina.
According to O’Brien, it made good sense for the captive industry to take advantage of and to enhance the appeal of the available services and amenities that were already being successfully administered by the local hospitality and tourism industry.
“Because of the support of the local governmental bodies we are finding that we are indeed becoming a world class captive domicile,” says O’Brien.
Much to the disappointment of those involved in the captive sector, Mr Csiszar’s third directive was not as immediately successful. Csiszar had stated that for a successful captive domicile to flourish there must be a strong infrastructure. “Outside South Carolina, it was hinted that we lacked infrastructure and that lack would be our downfall”, explains O’Brien.
South Carolina had never been a stronghold of insurance talent, with only a handful of insurance companies ever making their home here. According to O’Brien, Charleston was the site of the first insurance company in America, the Friendly Society. It was formed in 1735, but only lasted three years before the great conflagration of 1738 destroyed much of Charleston and caused the demise of the Friendly Society. Future Charleston insurance companies met their end in the winds of Hurricane Hugo. “It was true, we had no captive infrastructure to speak of and only a few traditional insurance companies to draw talent from as we embarked on the task of building a captive domicile”, says O’Brien.
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John J. O'Brien JD, CLU, CPCU
A Professional Corporation
Attorney,
Insurance Consulting & Expert Services
Waterway South
255 Land's End Drive
Charleston, SC 29407
(843) 737-2738
lionsthree@aol.com
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It was recognized by those involved in the insurance industry that there would be strength in numbers even if the numbers were small. According to O’Brien, it was suggested that there would be a monthly breakfast meeting to measure progress or possibly to share their defeats. He explains: “At first it was only a couple of captive managers, a regulator, an accountant, a banker and an insurance broker who showed up for breakfast. As the tiny numbers became larger numbers, it was realized that we needed a name, and it was decided that we would call ourselves the Friendly Society Restored.” The name was to symbolize both the return of Charleston as an insurance center as well as the combined desire to build an infrastructure on the principles of a mutual benefit society, as was the original Friendly Society in Charleston. “We would build a business infrastructure firmly based on the concepts of common purpose, loyalty, good manners, warmth, congeniality, fairness, and friendship”, says O’Brien.
In O’Brien’s experience, the members of the Friendly Society Restored always committed themselves to the high road, but there were no dues, by-laws, rules, committees or officers. The free membership and all membership benefits would be extended to qualified captive service providers, accountants, insurance professionals, lawyers, actuaries, reinsurance practitioners, bankers, risk professionals and captive owners. “In fact, if you are reading this, we welcome you to consider yourself a member of the Friendly Society Restored”, says O’Brien.
According to O’Brien, breakfast on the first Friday of the month now typically draws over 100 attendees and is still growing in numbers. O’Brien explains: “Much business is done during the days surrounding this monthly event. The sponsor is given a specially honored table, an allotted time on the program to extol the benefits of their organization, and special efforts are made to do business with them.”
Although it did not appear overnight, South Carolina’s infrastructure has grown dramatically. O’Brien explains: “As we who have always been here have improved our skills and added staff, outstanding actuarial firms, law firms, reinsurance intermediaries, captive managers, auditors, claims administrators and countless others have established offices here. Ongoing educational opportunities are offered regularly, including a lunch-and-learn program and a very popular nine-session course at the College of Charleston. In addition, representatives of firms not yet having offices here make a point of attending the monthly breakfast.
As South Carolina begins its eighth year as a successful domicile, O’Brien concludes: “There is now an infrastructure comparable or superior to any other captive jurisdiction. Because of the ideology upon which its success rests, it is an infrastructure that is user friendly and supported by the combined strength of all participants. The streets of Charleston have always resembled the streets of Hamilton, Bermuda for charm and beauty. Now the two cities mirror each other in the high caliber of captive insurance talent walking their sidewalks. The success of the captive industry in South Carolina has only just begun.” |
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