Global captives market evolving as risk managers seek innovation and resilience
The global captive insurance market is entering a new phase of innovation and expansion, with risk managers increasingly using captives as strategic tools to manage emerging risks, optimise capital and strengthen organisational resilience. That was the message from panellists at the “Global Captives Landscape – International Perspectives” discussion during the AIRMIC Captives Forum.
The panel brought together international expertise, including Jason Flaxbeard, executive managing director - alternate risk at Brown & Brown, Bill Fitzpatrick, SVP at Granite Management, Laurent Nihoul, chief executive of FERMA and Kelvin Wu, head of insurance at Weybourne Holdings, offering perspectives from the United States, Europe and Asia-Pacific.
According to Flaxbeard, the United States – the most mature captive market globally – has seen several phases of development since captives first emerged in the 1960s.
“Captives started as a capacity play,” he explained, before evolving into tax-driven structures and then back again to a focus on risk capacity as regulatory scrutiny increased.
Today, the discussion has shifted toward capital efficiency and risk aggregation. Many established captives have accumulated substantial surplus capital, prompting organisations to reconsider how that capital should be deployed.
“We have captives with a billion dollars of excess capital,” Flaxbeard said. “The question now is: what do you do with it? Do you return it to the parent, reinvest it in the business, or deploy it to assume additional risk?”
Increasingly, some captives are expanding beyond insuring the risks of their parent organisations by taking on reinsurance from external insurers. This diversification of risk portfolios, he noted, reflects a broader recognition that captives are part of a company’s overall capital strategy.
Another major trend is the growing emphasis on understanding and quantifying emerging risks – from environmental liabilities such as “forever chemicals” to cyber threats and non-damage business interruption.
“Captives are becoming risk central,” Flaxbeard said. “When all the risks are brought into one place, they can be measured and valued, which helps boards understand their true exposure.”
The discussion also highlighted the rapid growth of employee benefits (EB) captives, an area addressed by Fitzpatrick. While property and casualty captives have been common for decades, global EB programmes are a comparatively recent development.
Although the first programmes appeared in the mid-1990s, Fitzpatrick said meaningful expansion only began around 2018. Since then, interest has accelerated as multinational organisations seek greater control over healthcare, life and disability risks.
Unlike traditional insurance programmes, EB captives require close coordination with human resources functions and local management teams, as purchasing decisions are often made at the country level.
“You need a clear communication strategy,” Fitzpatrick said. “Risk managers may see the captive as a way to spread risk or save money, but HR needs to understand the value proposition as well.”
Mature EB captives are characterised by high participation rates across global subsidiaries and a strong data-driven approach to claims analysis, prevention and programme design. Medical coverage typically represents the majority of premiums, providing a predictable base that enables organisations to explore more sophisticated risk-management strategies.
In Asia-Pacific, Wu challenged the perception that captive adoption remains limited. While historically constrained by soft insurance markets and price sensitivity, he said the region has seen significant growth in recent years.
Singapore, for example, has seen its captive population rise from around 60 to roughly 90 over the past five to seven years. Meanwhile, domiciles such as Malaysia and Hong Kong have also seen new formations.
Several factors are driving this momentum, including rising natural catastrophe exposure and gaps in traditional insurance capacity.
“In many parts of Asia-Pacific you have significant nat-cat risk but limited insurance capacity,” Wu explained. “Companies are increasingly turning to captives and parametric solutions to address those gaps.”
He also highlighted the creation of a Singapore-based captive association designed to provide a collective voice for captive owners in discussions with regulators. The initiative aims to ensure regulatory frameworks better reflect how corporations use captives as strategic risk-management tools.
From a European perspective, Nihoul said the introduction of Solvency II regulation in 2016 initially slowed captive formation as organisations adjusted to stricter governance and capital requirements.
However, he argued that the regulatory framework ultimately improved risk understanding and financial discipline among captive owners.
“Solvency II forced companies to gain a much deeper understanding of their balance sheet and risk profile,” he said.
Combined with the recent hard insurance market – characterised by higher prices, reduced capacity and tighter terms – this increased maturity has contributed to a resurgence in captive activity across Europe since 2019.
Nihoul also welcomed the emergence of new European captive domiciles, arguing that greater choice benefits risk managers and could stimulate further market growth rather than simply shifting captives between jurisdictions.
Across all regions, panellists agreed that captives are evolving from niche risk-financing vehicles into central components of corporate risk strategy.
Flaxbeard predicted the next stage of development would include greater use of external capital, improved modelling of previously unquantifiable risks and broader adoption among mid-market companies.
“There isn’t a conversation about insurance today that doesn’t involve a captive in some way,” he said.
As organisations face increasingly complex and interconnected risks, the panel concluded that captives will continue to play a vital role in helping companies measure, manage and finance uncertainty in the years ahead.
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