Risk managers entered 2020 with certain expectations about the challenges and opportunities the year would present. The onset of the COVID-19 pandemic has forced them to throw their plans out of the window, and rethink how to manage their exposures in a world that suddenly looks very different, says Milliman’s Mike Meehan.
As the global economy and infrastructure continue to weather what feels like more and more storms, many companies find themselves in the middle of cost containment and restructuring strategies. Taking on more risk during these disruptive times may seem counterintuitive, but organisations with existing captives or plans to launch them are doing just that, says Adam Miholic of Hylant.
Connecticut is a relative newcomer to the increasingly competitive world of captive insurance regulation, but has quickly earned a reputation as an attractive domicile. As pressure increases on offshore captives to bring business back onshore, the state hopes to capture a lot of new business. Captive International reports.
The captive industry has been cowed by the IRS for years, with the tax collector securing a string of legal victories that left businesses wondering whether having a captive was worth the effort. However, the COVID-19 pandemic has shattered the logic on which those cases were won, and will lead to a resurgence among 831(b)s, predicts Matthew Queen.
The concept and understanding of captive insurance in Latin America and the Caribbean has been evolving over the past few years, and the adoption of captives among organisations in the region has progressed considerably, say Marsh’s Maria Escobar and Alejandro Santos.
With the COVID-19 pandemic bringing about an increase in cyber threats and a heightened reliance on remote work, strong cyber security cultures are needed now more than ever. Turning to captives may be the best way for organisations to improve their cyber security with personalised coverage, says Mark Lanterman, chief technology officer of Computer Forensic Services.
The gig economy is a labour market of short-term contracts and freelancers that to many people conjures up images of Uber and Lyft. However, the concept is much bigger than that, and looks set to dominate the future of work. People, employers and insurers must learn to adapt to make the most of the potential benefits, says Greg Lang of the Reinsurance and Insurance Network.
The COVID-19 outbreak has been a social and economic disaster, and it is no surprise that authorities have been keen for re/insurers to help businesses pay the rapidly escalating bill resulting from the economic shutdown. But forcing institutions to pay out for risks that were never factored into their original premiums is not the way to go, says Michael Mead of M.R. Mead & Co.
The world is changing rapidly, and the insurance industry is reinventing itself to offer new solutions to emerging risks through both traditional products and alternative risk transfer solutions. To ensure it remains relevant in a future dominated by intangible assets and risks that are difficult to price, the insurance industry must revolutionise its use of data and seek collaboration with insurtech companies and customers alike, says Guglielmo Maggini of the Allianz Group.
The COVID-19 crisis has exposed how interdependent risk has become in the modern world, and the extent to which a single event can devastate whole economies, let alone individual businesses. The world must respond by becoming much more creative in its approach to risk management, and captives should be at the heart of those efforts, says Michael Zuckerman of Temple University’s Fox School of Business.