Captive insurance vehicles are rapidly growing in popularity as risk managers seek alternative ways to finance emerging risks their organizations now face. Marsh’s 2018 Captive Landscape Report examines 1,100 captive insurance institutions globally. The report found that cumulative growth in the number of Marsh-managed captives writing cyber liability rose by 240 percent from 2012 to 2017, while in the same period the number of captives insuring employee benefits across multiple geographies grew by 550 percent. Marsh also saw an 83 percent increase from 2012-2017 in the number of captives writing terrorism coverage.
According to Marsh’s report, 60 percent of captive owners surveyed maintain their captive as a formal funding vehicle to insure risks that the parent company has decided to self-assume, and 42 percent said it was to provide access to the reinsurance market. The report noted strong year-over-year growth in captives in the Asia-Pacific region since 2012. Last year, Marsh recorded a 24 percent increase in the number of Marsh-managed captives in Asia-Pacific, largely driven by parent companies based in Japan, China, Hong Kong, and Singapore.
“Demand will keep growing”
Ellen Charnley, President, Marsh Captive Solutions, commented: “As the global risk landscape becomes more complex, organizations are increasingly using captives to help accelerate their corporate objectives, reduce volatility, protect human capital, and boost financial certainty. Captives offer unrivalled flexibility in financing emerging and high-severity risks, such as cyber risks, terrorism, and employee benefits. We expect this growth to continue, as more organizations adopt innovative new ways of placing captives at the core of their risk management strategies.”