Captives remain attractive as hard market continues to bite

Even with recent improvements in the commercial insurance market, several sectors, such as property, are still experiencing difficulties, which is spurring further increases and interest in the use of captive insurance to assume greater levels of risk retention, according to a panel of chief executives at the 2024 CICA conference. 

Chaired by Nick Hentges, chief executive of Captive Resources, the panel comprised: Dawn Hiestand, executive vice president, Zurich North America; Brian First, president, Arch Insurance North America; and Ryan Gustafson, head of Captive Solutions, AIG. 

Asked what the main challenge facing the insurance industry is, the panel agreed that the hard market, which has lasted for at least two years now, means that clients are still looking to save on costs. The panel pointed out that captives can offer nimble solutions to some of the more complex risk management issues that clients face. 

The fact that more regulators and domiciles are becoming open to the concept and attraction of captives was also highlighted. Companies are generally also more comfortable with captives as a concept as well. 

As Hentges put it, knowledge of captives has increased and the captive word is out. He said that now is the perfect time and place to grow the captive industry.   

However, the panel also had a few concerns. Firstly, the need for young talent was repeatedly highlighted, along with the need to get more graduates into the captive industry.  

Technology was also mentioned, with the panel pointing out that whilst technology like artificial intelligence might be extremely useful, it needs to be used in a thoughtful way and that human brainpower can be better than AI in terms of creating solutions. 

The panel stressed that it is important to give customer full range of options – single parent or group captive? What’s best for the client? And what’s the best long-term decision?  

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