Small and medium-sized enterprises (SMEs) in the US are driving growth in the captive insurance market.
This is according to Marsh’s 2015 US insurance market report, which added that Bermuda and Cayman still lead the captive count offshore, while Vermont is the largest US domicile with 588 captives.
Over the past two years, Oregon, Ohio, North Carolina, and Texas have implemented captive legislation, expanding the portfolio of choices for captive owners and encouraging captive growth in the US market.
“As more states enact legislation, competition to attract captives will grow, allowing new owners to select a state that best serves their needs and giving bargaining power to existing captive owners. The US now has more than 35 states with captive legislation, a clear sign that the number of captives in the US is likely to increase,” said Marsh.
However it warned that captive owners should remain vigilant about evolving regulations in domestic and foreign domiciles.
“For example, a number of regulatory inquiries by the Internal Revenue Service and international insurance supervisors in 2014 challenged some captive arrangements, a trend that is likely to continue as the captive market grows,” said the report.
It added that this can be viewed positively, as it should encourage captive insurance market participants to create captives for the proper business and risk management reasons.
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