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What is ICOLI & How is it Different from COLI?

Written by: Andesa Services

Insurance company-owned life insurance (ICOLI) has generated significant buzz in the insurance industry lately—and for good reason. As more companies adopt ICOLI as part of their financial strategies, understanding how it works and how it compares to corporate-owned life insurance (COLI) is more important than ever. Let’s break it down.

What is ICOLI?

Insurance company-owned life insurance (ICOLI) is a specialized financial tool insurance companies use to enhance their financial stability and operational flexibility. Here’s how it works:

  • The insurance company owns the policies and is the beneficiary of the death benefits
  • Companies typically place these policies on the lives of highly compensated employees
  • ICOLI helps insurance carriers diversify their investment portfolios and optimize financial metrics

ICOLI has become an increasingly popular choice for insurers aiming to strengthen their financial position by offering a mechanism to achieve capital efficiency and manage risk.

How is ICOLI Different from COLI?

While ICOLI and COLI share structural similarities, the key difference lies in who owns the policies:

  • ICOLI (Insurance Company-Owned Life Insurance): Exclusively owned and utilized by insurance companies
  • COLI (Corporate-Owned Life Insurance): Owned by other corporations, typically used to support employee benefit obligations or other corporate strategies

Both serve as tools to achieve financial goals, but ICOLI specifically caters to the unique needs and regulatory environment of insurance companies. In contrast, COLI caters to a broader range of corporations with different operational priorities.

Why is ICOLI Gaining Traction?

ICOLI’s rise in popularity stems from its unique advantages for insurance companies:

  • Capital Improvements: ICOLI is an admitted asset with favorable Risk-Based Capital (RBC) charges, making it an efficient tool for capital management
  • Investment Diversification: Through access to alternative investment vehicles such as insurance-dedicated funds (IDFs), separately managed accounts (SMAs), and private equity, ICOLI enables insurers to achieve better returns while spreading risk across a broader portfolio
  • Efficient Benefits Funding: ICOLI can fund executive benefit programs, providing a cost-efficient solution that alleviates strain on other financial resources

These attributes make ICOLI a compelling option for insurance companies seeking innovative ways to enhance their financial resilience and remain competitive.

How Andesa Supports COLI & ICOLI Administration

Administering COLI and ICOLI policies is a complex and critical process, requiring robust systems and expertise. At Andesa, we provide end-to-end solutions tailored to the unique needs of these plans, including:

1. Policy Lifecycle Administration

  • Policy Setup and Maintenance: Accurate setup and ongoing management of policies
  • Premium Management: Processing premium payments and allocations efficiently
  • Policy Valuation: Ensuring accurate financial reporting of ICOLI values

2. Data Accuracy & Reporting

  • Cash Value Tracking: Monitoring and reporting cash value growth
  • Death Benefit Processing: Ensuring timely and accurate benefit disbursements
  • Regulatory Compliance: Generating compliance reports to meet industry standards

3. Advanced Operational Support

  • Overnight Batch Processing: Running large-scale operations like premium payments, fund transfers and re-allocations, and fund unit value updates nightly
  • Transaction Processing: Handling loans, withdrawals, and other financial transactions
  • Audits and Reconciliation: Conducting regular audits to ensure data integrity

4. Technology & Platform Integration

  • Configurable Platforms: Seamlessly integrating with client systems for real-time access to policy data
  • Automation: Leveraging automation for recurring processes to improve efficiency

Partner with Andesa for COLI & ICOLI Administration

Whether you’re a corporation exploring COLI to support executive benefits or an insurance company leveraging ICOLI for financial growth, Andesa is here to help.

With our comprehensive policy lifecycle solutions, advanced operational support, and a focus on compliance, Andesa ensures expert administration of your COLI and ICOLI cases from start to finish.

Want to learn more? Contact us today to see how Andesa can support your unique COLI and ICOLI administration needs.

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