EXCLUSIVE: US captive numbers are growing fast; European captives remain flat

The captive insurance industry needs to collectively up its game when it comes to protecting the client’s brand, Peter Mullen, CEO of Aon Captive and Insurance Management, told Captive International.

The current state of captives vary depending on the region and they work with different dynamics in each region. This has affected the captive growth and how captives are run, Mullen said.

“In the US, we continue to see captive number growing where the economic environment is reasonably robust and new domiciles offer new options for clients.

“Some of this growth is at the expense of the offshore domiciles serving in the US market where we expect growth to be flat for the next few years. We also see the potential in the US for further growth in the middle market sector.”

However, Mullen said that due to a combination of Europe’s economic uncertainty and the introduction of Solvency II, he sees captive growth ‘remaining flat', adding that he expects that low interest rates and the soft insurance market to continue for some time, so these factors will remain headwinds.

He went on to say that the way to ensure the captive industry is successful during this uncertain time is to focus, as it has for years, on governance, risk and compliance for the captive and its parent.

“This is where the choice of captive manager has to be made, not just on cost, but also on the manager’s ability to run the captive in a compliant manner and keep both captive and parent safe," Mullen concluded.

“We operate in a lot of offshore jurisdictions that are easy targets for the press and the last thing your client needs is a brand incident related to the captive.”