Captives in the mainstream: a defining moment for risk financing

At the Airmic Guernsey conference, the plenary session “Captives in the Mainstream” underscored how far captives have progressed from niche financing vehicles to central pillars of corporate risk strategies. 

Moderated by Julia Graham, chief executive of Airmic, the panel featured Caroline Bradley of the Guernsey Financial Services Commission (GFSC), John Rowson of Howden, Paul Sykes of Aon Insurance Managers (Guernsey), and Caroline Wagstaff of the London Market Group (LMG).

Setting the scene, Graham declared: “Captives are a central part of global risk strategies … no longer a passing element of market conditions.” With captive premiums forecast to reach £120 billion by 2030, she argued that “thinking captive first will ensure that opportunities are not missed.”

Yet, what does “captive first” mean in practice? For Rowson, the definition varies but, at its core, “the default consideration for all risks within an organisation is that they put it through the captive.” He pointed to an example of a risk manager with 17 insurable programmes, of which 15 were channelled through their captive – an exceptional case, but one that highlights the model’s potential.

Sykes reinforced the point: “The captive does allow focus for risk finance control,” noting that pressure from CFOs for precise financial forecasting makes captives invaluable tools. He added that captives also help organisations decide “whether they retain or transfer risk,” with their role becoming more pronounced as conventional insurance markets harden or exclude certain exposures.

The widening protection gap was another theme. Rowson observed that natural catastrophe losses, particularly in the US, were forcing insurers to retreat from high-risk areas: “We’re seeing insurance companies leave California and Florida … the availability of insurance is harder.” Captives, he suggested, can step in to provide cover where traditional markets fail.

For regulators, the challenge is to balance innovation with oversight. Bradley noted that despite decades of predictions of their decline, “through all of these issues [captives] have survived and thrived.” The GFSC, she stressed, maintains an open-door approach: “Come and talk to us about new things … we’re open to those discussions.”

Turning to the UK’s proposed captive regime. Wagstaff, who has championed the initiative with successive governments, admitted the process had been protracted: “We went through five economic secretaries to the Treasury … but I’m delighted we are where we are.” She emphasised the need for competitiveness: “Unless this is a genuinely committed offering for customers … we might as well go home.”

Would a UK regime threaten Guernsey? Not necessarily. Rowson argued that “in the early days, a lot of the experience in managing captives will be in Guernsey … supporting UK companies quite closely.” Sykes agreed, framing the relationship as collaborative rather than adversarial, with Guernsey acting as a long-standing “part of the solution for the UK post-Brexit.”

Looking ahead, the panel agreed that captives are uniquely positioned to tackle emerging risks, from cyber to climate change. As Rowson put it, “Captives are really effective at incubating risk … developing the policy wording and data that then allows the market to step in.”

As Graham concluded, captives are no longer peripheral. Their growing role signals not just resilience but mainstream recognition, with regulators, markets and risk managers alike shaping what could be a defining era for the sector.

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