Collaborate to innovate: Redefining the captive operating model

As we gather at AIRMIC 2025, we witness the continued evolution of captives as key strategic tools, increasingly recognised as engines of insight, agility and value creation. Regulatory frameworks are maturing and risk management continues to develop, elevating captives on Board and Risk Committee agendas. 

While new captive interest continues, existing owners seek to unlock value by optimising: integrating data, technology and new ways of collaborative thinking, while exploring alternative risk transfer solutions.

This reflects a shift in ethos towards perpetual optimisation, to redefine what ‘good’ looks like for a captive. Captive owners are looking at how to leverage data, collaborating across the captive value chain in a way that aligns strategy, deepens insights and delivers results across underwriting, capacity management and beyond. Key to this is a partnership approach across risk managers, brokers and insurers, transforming information into actionable insight.

A shift in expectations

Much like a qualified investor, we are witnessing the emergence of the “qualified insured” – captive owners operating with a higher degree of sophistication and strategic intent. They expect tailored analytics, deep risk and regulatory insight and a seat at the table in shaping risk strategy. They want their captive to price accurately, perform predictably and provide actionable intelligence.

They are right to expect more, and so the captive service model must evolve too, whether delivered in-house, through brokers, insurance managers, or via insurer partnerships. This means clearer accountability, better data integration and smarter portfolio design, treating the captive not just as a policyholder but as a risk-sharing partner, in a manner proportionate the captive’s ambitions. 

Current hot topic: We see increasing commonality of approach between large captives and larger international commercial insurers. In these instances, captive owner considerations are moving beyond ‘vanilla’ re-feasibility studies, towards technology and data-led claims, reserving and underwriting transformation. We are also observing trends towards innovative alternative risk transfer approaches, moving beyond ‘traditional’ capacity and increasingly towards capital market solutions. 

A stress test

Two functions are examples where traditional captive approaches can be tested whether it is aligned around shared ambition or just executing process.

Underwriting: We see leading captives making more independent decisions, which hinge on quality, structured and timely internal loss data, market benchmarks and actuarial modelling. 

Therein lies opportunity for greater collaboration: Are brokers contributing analytics that deepen underwriting insight? Are carriers offering real-time feedback and visibility into market trends? Crucially, is the captive positioned to take meaningful action on those insights? 

Capacity management: Capacity is more valuable if it is sustainable and delivers predictable performance. This presents further opportunity to redefine ‘collaboration’: Does the insurer view the captive as a long-term risk partner or merely a workaround for market constraints? Do all parties share a common view of how risk is layered, retained and transferred?

Collaboration, not just coordination

While tempting to see the captive as a standalone entity, its performance reflects a broader network of relationships among owners, insurers, brokers and third-party providers. 

True collaboration requires clarity of roles, alignment of goals and an understanding of how each party contributes to the captive’s success. For example, a forward-thinking insurer may go beyond fronting to structure reinsurance, benchmark performance and co-design portfolio strategies, while a broker might embed analytics into renewals or advise on alternative risk-financing pathways. This is playing out in practice, where we see captives being built in close collaboration with capacity providers from the feasibility stage, to ensure commonality of vision.

A shared opportunity to lead

Captives are entering a new era, defined by their ability to act as centres of excellence in risk management and capital strategy. This demands introspection, collaboration and an unwavering focus on challenging the status quo to drive continuous improvement. It demands a strategic lens, using all tools and data at the captive’s disposal. 

This is not only a chance for the captive to reassess and build a foundation for future success. It is also an opportunity for brokers and insurers to adapt: providing capacity, sharing insights and driving strategic alignment with the  “qualified insureds” of the ambitious and increasingly sophisticated captive world.

The answer may lie not in working harder – but in working better, together.

KPMG is an independent multi-disciplinary firm that provides a range of professional services tailored to all verticals of the (re)insurance industry and throughout the captive lifecycle.

Alec Innes, partner, Risk and Regulatory, KPMG UK. He can be reached at Alec.innes@kpmg.co.uk

Daniel Message, senior manager, FS Transformation, KPMG UK. He can be reached at Daniel.message@kpmg.co.uk

Pierrick Livet, senior manager, Advisory, KPMG Bermuda. He can be reached at Pierrick.livet@kpmg.bm

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