16 March 2023Analysis

Marsh: cell captives seeing increased growth

A new report by Marsh has highlighted the increasing attention being paid to call captives.

According to Marsh, as businesses face uncertainty, risk volatility, and changing conditions in the insurance market, risk finance options are more important than ever, with captives being seen to be a valuable, flexible solution to meet business needs.

Marsh has published the report on its website, entitled ‘The Definitive Guide to Captive Insurance.’

During what has been a challenging insurance market in most coverage lines, the number of new Marsh managed cell entities grew by 49% in 2021 — and double-digit growth is expected to be seen again for 2022. Property, cyber, professional liability, and general liability were the top coverages written in cell facilities formed during the past three years.

In the report Marsh pointed as risk-bearing entities, cells can support loss control programs, prefund losses, provide access to reinsurance, and retain profitable insurance business.

“A cell captive is simpler to form than a standalone captive because the cell is part of an established entity,” commented Marsh about the report. “A cell eliminates the need for legal work to form the entity, and financial requirements are simplified. Additionally, it does not create another entity for the sponsoring organization to manage on an org chat. One way to think of a cell is like leasing space in an already constructed office building that has other tenants, compared to designing and constructing an entirely new building for a single tenant. It’s one reason some refer to cells as ‘rent-a-captives.’”