Captives open the risk management door wider

In the second feature based around the results of a survey of what our readers think of the Bermuda market, we break down the data that came in to us from respondents.

Companies are increasingly looking at captives as an innovative way of covering risks. That’s the main result of a survey by Captive International for the Bermuda market carried out in 2024.

We asked our readers what they thought of the Bermuda captive insurance market at the moment, and they responded with some interesting answers to our latest survey.

When we asked: ‘Which risks are you seeing companies most interested in transferring to a captive?’, with respondents able to choose multiple answers, a wide range of options and suggestions soon became clear.

Property was chosen by 71 percent of respondents and general/third party liability chosen by 82 percent of readers. Cyber was chosen by 53 percent of respondents, with employee benefits being chosen by 41 percent.

Healthcare, which is often chosen by many captives based out of the US, was chosen by 18 percent of respondents, but medical malpractice was chosen by another 12 percent. Auto liability was chosen by 41 percent and then employer’s liability by 18 percent. Product recall was chosen by 12 percent and credit/trade credit by 18 percent. Another 6 percent chose environmental and 18 percent chose marine.

Seventy-seven percent said they were growing their market share. 

Terrorism was chosen by 12 percent, professional indemnity was chosen by 29 percent, product liability was chosen by 24 percent and catastrophe was chosen by 12 percent. Finally, directors and officers (D&O), was chosen by 24 percent of respondents.

Opportunities

When we asked the question: ‘Where do you see opportunities for your business?’, again with respondents able to choose multiple answers, we saw a wide variety of answers.

Seventy-seven percent said they were growing their market share. The next option chosen was expanding into new lines of businesses or service, which was chosen by 35 percent. Improving profitability through higher rates and/or cost reductions, was chosen by 24 percent, and 12 percent said they were seeing opportunities through consolidation as they were considering mergers and acquisitions.

Respondents were able to fill in comments in this survey suggesting their own answers. One person said: ‘As public accountants, we see opportunity to further educate and establish more reputational awareness’. Another put down risk management as a reason. 

Retrospective reinsurance placement was cited by a third, while a fourth listed cyber coverage as being an opportunity for their business at the moment.

Issues

To the question: ‘What are the other big issues on your agenda?’, with respondents again being able to choose multiple answers, the option most chosen, by 75 percent of readers, was new and emerging risks such as cyber and artificial intelligence (AI). This was followed by talent management, attracting and retaining people, which was chosen by 44 percent.

Climate change was chosen by 31 percent and profitability chosen by 19 percent environmental, social and corporate governance issues (ESG) was chosen by 31 percent. Once again, readers were given the opportunity to suggest another reason, an option exercised by one person, who said that it was regulatory compliance.

Captive International will run another survey for Bermuda next year and it will be fascinating to compare and contrast the results of the two surveys, seeing what is important ahead of next year’s Bermuda Captive Conference in June 2025.