23 May 2018Actuarial & underwriting

Large uptick in captives writing cyber, terrorism, employee benefits: Marsh

Captive insurance is rapidly growing in popularity among risk managers seeking alternative ways to finance emerging risks, according to Marsh’s 2018 Captive Landscape Report.

Of the 1,100 captives managed by Marsh Captive Solutions, the amount writing cyber liability grew by 240 percent from 2012 to 2017.

In this same period, the number of captives insuring employee benefits across multiple geographies grew by 550 percent.

The number of captives writing terrorism coverage backed by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) also increased by 83 percent.

Marsh noted that many firms are examining their captives to see whether they can take advantage of TRIPRA, which can also be used to cover cyber-terrorism perils in the US.

Furthermore, 60 percent of captive owners surveyed maintain their captive as a formal funding vehicle to insure risks that the parent company has decided to self-assume, and 42 percent said it was to provide access to the reinsurance market.

Asia Pacific also experienced strong year-on-year growth, with a 24 percent increase in the number of Marsh-managed captives in the region. This was largely driven by parent companies in Japan, China, Hong Kong and Singapore.

“As the global risk landscape becomes more complex, organisations are increasingly using captives to help accelerate their corporate objectives, reduce volatility, protect human capital, and boost financial certainty,” said Ellen Charnley, president of Marsh Captive Solutions.

“Captives offer unrivalled flexibility in financing emerging and high-severity risks, such as cyber risks, terrorism, and employee benefits. We expect this growth to continue, as more organisations adopt innovative new ways of placing captives at the core of their risk management strategies.”

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