18 September 2020Analysis

Marsh sets new record for captive launches

Marsh formed a record 76 new captive insurance companies between January and July 2020, an increase of over 200 percent compared to the same period in 2019.

The increased number of captive launches comes as tightening global insurance market conditions throughout 2019 have led to higher captive utilisation, according to Marsh’s  2020 Captive Landscape Report: Captives Offer Value in Uncertain Times.

Ellen Charnley, president of Marsh Captive Solutions, said: “While none of the new captives formed so far in 2020 specifically cover pandemic-related losses, organisations are using their captives to help navigate them through the global COVID-19 pandemic.”

Financial flexibility is one of the key advantages of owning captives, explained Charnley. “Since March 2020, Marsh has helped owners free $3 billion from their captives using short-term liquidity tactics, such as intercompany lending, to help them respond to cash-flow challenges brought on by the pandemic,” she said.

Marsh pointed to steep premium volume growth in several coverage lines such as supply chain, business interruption and contingent business interruption, where premiums written by Marsh-managed captives rose 283 percent on average in 2019.

All-risk property premiums rose 64 percent on average, led by the energy and financial institutions sectors, which saw all-risk property premiums rise 151 percent and 104 percent, respectively.

The 2020 Captive Landscape Report is based on approximately 1,240 Marsh-managed captives around the world that agree to share their data on an anonymous and aggregated basis.