Artex report highlights rising role of captives

Artex Risk Solutions has published a new State of the Market Report, which looks at a number of different insurance areas, including captives.

The report evaluates captive insurance efficacy and examines key drivers of the commercial insurance global reinsurance markets, alternative risk market, London emerging as an ILS hub and the impact of regulatory shifts on the market.

Some of the main captive issues that the report brings up include:

• In Europe, new cell captives and cell formations have outpaced that of single-parent captives, a trend that Artex anticipates will continue.

• In the challenged casualty market, captives offer an alternative to primary insurance for coverage lines that have been hit hard by social inflation and nuclear verdicts. They can fill in market gaps when primary insurers withdraw from underwriting a particular coverage.

• In terms of the emerging use cases, captives can self-insure against AI-driven fraud, ransomware and data breaches.

• Captives are crucial in managing risks tied to renewable energy, climate-resilient infrastructure and environmental liabilities, especially in emerging sectors like hydrogen production and offshore wind.

• With US medical costs projected to rise significantly in 2025, medical stop-loss captives are a key tool for mid-to-large employers to manage healthcare expenses. Companies have increasingly been using captives as a risk financing tool to effectively manage and finance that risk within their organisation. This captive use is harnessed by both single parent captives as well as group captives, both of which continue to be efficient tools for a long-term strategy to manage this ever-increasing insurance spend.

For more information or to get a copy of the report, contact Artex Risk Solutions.

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