Captives at the Core: The Foundation of a Risk Financing Strategy

How organizations around the world use their captive insurers.

This marks the 10th year that we have published an in-depth captive report. Based on data from over 1,100 captives managed by Marsh, this year’s report focuses on understanding how captives are being used depending on geography, risk issue, and/or industry, surfacing opportunities that may exist for greater utilization.

We’ve seen many changes in 10 years, the most obvious of which is the dramatic rise in numbers: In 2006, there were approximately 5,000 captives globally; in 2016, that number was over 7,000, a 40% increase. And we’ve witnessed the geographic spread of captives continue, with an increasing number now based in Europe and Asia, solving unique risk issues. But geography and numbers are only part of the story.

Today, global economic and political uncertainty is on the rise, and disruption from technology innovation is growing exponentially, exposing organizations to unfamiliar and sometimes unquantifiable risks. In parallel with these macro trends, more companies than ever see captive utilization as being at the core of innovative risk management strategies.

One indication of that trend is that captives are being used to provide solutions outside of traditional property/casualty programs — for example, in 2016 we once again saw double-digit growth in captive use for cyber risk and employee benefits. As captives are used to address a growing range of risks, they are also helping clients break down operational silos between risk management, human resources, and business development.

The changing risk landscape is also shifting the industries that are leveraging captives. While financial institutions and health care organizations continue to have the highest number of captives, captives in other industries are growing in complexity, which equates to higher premium volumes.

We understand that companies face pressure for growth and must be nimble to reach their financial objectives. We hope you find The Captive Landscape insightful, and we invite you to contact your Marsh client service team to discuss the report in greater detail.

Nick Durant President, Marsh Captive Solutions

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