SIIA: captive market booming

The Self Insurance Institute of America (SIIA) has announced the findings of its third Captive Industry Survey.

According to the SIIA the captive industry continues to grow, take on new and emerging risks, and build upon business needs.

“The 2023 Captive Survey results demonstrate resilience and adaptability in navigating both health and P&C-related risk, and the outlook for the captive industry remains highly positive,” said the SIIA in a statement. “Respondents collectively ranked their sentiments on the future of the captive industry as a 9 on a scale of 1-10. The positive data and industry growth trends reported in the survey include increases in staff hiring, captive formations, and total captive premium amounts.”

This is especially true in the employee benefits and medical stop-loss areas, said the SIIA, where 77% of respondents reported strong growth in the past year.

General industry outlook remains high – Captive Survey respondents rated the future of the captive industry a 9 on a scale of 1-10. This is a nearly identical result from last year, when close to 90% of respondents reported having a bullish outlook on the future of the captive industry.

The full survey can be obtained from the SIIA. However, its findings included the following:

·  Increasing staff hirings – Nearly 75% of respondents reported that they have added staff in the past year, with a significant number of these additions being management staff, underwriting, and accounting. This is an increase from last year’s survey, where 66.7% of respondents reported staff growth.

·  Captive formations again outpacing closures – For the third year in a row, captive formations have significantly outpaced closures. Survey respondents reported an average of 4 new captive formations for every 1 captive closure per respondent. That is nearly double last year’s reported rate, in which there were an average of 2.5 formations for every 1 closure. The total number of new captives reported over the past year was 90, nearly triple the 22 total captive closures reported.

·  Group captive formation – 43% of respondents reported group captives as the captive structure most formed, with single-parent captives coming in a close second at 35%. The SIIA said that this is an interesting change from last year’s survey, in which single parent was the most selected, followed by group captives.

·  Captive client growth – The average respondent reported 206 captive clients being served by their organisation. This is a slight increase from last year’s survey, which reported an average of 137 clients served. The total number of captive clients served by ALL respondents in this year’s survey was 5,377, which is nearly double last year’s reported total of 2,884.

·  Total captive premium amount reaches over a billion dollars – The average total captive premium amount was over $1.2 billion, more than double last year’s total of $431,829,200. The median reported total captive premium was $665,000,000, and the single highest reported total amount was over $8 billion. The total reported captive premiums for this past year was $19,344,549,073. However, the majority of respondents reported a total captive premium amount between 10,000,000 and 110,000,000.

·  Average estimated premium per captive was $6,734,722.

·  Employee benefit and medical stop-loss growth – A majority of respondents (77%) reported seeing the most growth in employee benefits and medical stop-loss captives. This was the third year in a row demonstrating this trend.

·  Price inflation on the upswing – 34% of respondents listed price inflation as the biggest yearly trend, with staffing shortages coming in second at 19%. Price inflation and staffing shortages were similarly listed as the top two trends in last year’s survey.

·  Captive domiciling moving onshore – Respondents are seeing captives moving domiciles from offshore to onshore. Onshore domiciles reported including Vermont and North Carolina, while Bermuda was a top offshore response.

·  Captive owners setting up multiple captives – Captive owners reported an average of 1.6 captives per business, an increase from last year.

·  Captive owners benefit from captives – The majority of captive owners (71.4%) reported that they have not considered closing or leaving their captives. At the same time, 57% of respondents reported that they were able to find coverage similar coverage in the commercial market, an increase from last year’s 42%.