The role of captives in navigating the polycrisis
The global insurance industry is facing a global storm of crises that is unlike anything it’s faced before.
That’s the view of Everest Group president and chief executive Jim Williamson, who delivered an assessment of the forces reshaping the global insurance landscape to assembled delegates at the Cayman Captive Forum 2025.
Framing his talk as a “Ghost of Christmas Future” moment—grim at the outset but hopeful by the end—Williamson argued that the insurance industry now operates in an era defined by complexity, interconnection and accelerating risk. To remain effective, insurers and captives must rethink long-standing assumptions and embrace new tools, technologies and financial structures.
Williamson began by noting that for generations insurance has operated on bedrock principles: predictability, patience, prudence and the ability to forecast using long, stable sets of historical data. That foundation, he warned, is now being shaken by what many call the “polycrisis”—the convergence of multiple, simultaneous and interlocking global shocks. Rather than confronting discrete or sequential challenges, the industry now faces overlapping storms: geopolitical tension intensifying cyber threats, climate change disrupting supply chains, and social forces eroding traditional liability norms.
He organised this shifting landscape into three dominant forces.
1. The new trifecta of volatility
The first force is what Williamson called the “trifecta of volatility”—social, geopolitical and digital.
On the social front, he argued that “social inflation” is an inadequate euphemism for what he prefers to call legal system abuse. In the United States in particular, jury verdicts and settlements have escalated from historically predictable ranges into unprecedented “nuclear” outcomes. A fatal auto accident claim that might have cost $5 million a decade ago can now spiral to $50 million, $100 million or more, influenced by litigation funding, shifting societal views about corporate responsibility, and the erosion of tort-reform safeguards. This unpredictability undermines the foundation of liability pricing and places large, consumer-facing brands at particular risk.
Geopolitical volatility, meanwhile, is reshaping the global order. Williamson contrasted the post–Cold War optimism that followed the fall of the Berlin Wall with today’s multipolar reality. Economic interdependence, once seen as stabilising, is increasingly weaponized: sanctions, expropriation of assets, export restrictions and supply-chain choke points all carry profound insurance implications. He described scenarios such as a potential Taiwan Strait crisis, where disruption to the world’s semiconductor supply could trigger a global economic shock far beyond traditional “business interruption.”
The third component—digital volatility—centres on rapidly escalating cyber risk. Cyber incidents have moved from IT-department concerns to existential enterprise risks, especially as operational technology merges with digital systems. Williamson warned of the rising possibility of an AI-enabled “cyber hurricane”—a single vulnerability exploited simultaneously across many organisations. State-sponsored cyber operations add further complexity, obscuring attribution and amplifying systemic exposure.
2. Environmental imperative and climate-driven risk
Williamson’s second major force is the environmental imperative. Climate change, he emphasised, is not a future threat but a present and measurable phenomenon visible in Everest’s own data. Catastrophe models built on long historical records are struggling to keep pace as both primary perils (such as hurricanes) and so-called secondary perils—severe convective storms, wildfires, droughts—grow in frequency and severity.
Loss totals once considered extreme—$100 billion in insured losses in a year—are increasingly routine. Meanwhile the global protection gap is widening, especially in regions where coverage is becoming prohibitively expensive or unavailable. Williamson highlighted the regulatory challenges this creates, as some jurisdictions attempt to suppress pricing despite mounting risk, ultimately creating availability crises and weakening resilience.
3. Strategic innovation and the duality of new solutions
Despite the sobering picture, Williamson ended on a note of optimism. The industry, he argued, is responding with a “duality of innovation”: radical intelligence powered by AI, and new approaches to managing and transferring risk.
AI-driven analytics allow insurers to model risk in ways once impossible—combining satellite imaging, lidar, soil-density mapping and other datasets to analyse flood risk or storm behaviour without relying on centuries-old historical records. In claims, AI and drones can accelerate assessment, triage and, in some cases, trigger rapid parametric payments directly to affected policyholders.
On the financial side, Williamson emphasised burgeoning innovation in captives, parametric solutions and capital-markets risk transfer. Captives are increasingly used not only for cost control but for incubating coverage solutions the traditional market cannot yet underwrite. Parametric products, using independent and objective data triggers, allow faster, simpler, and more predictable payouts. Meanwhile, insurance-linked securities, sidecars and other capital-markets tools offer new paths for financing peak perils that exceed traditional balance-sheet capacity.
Williamson closed by noting that the insurance industry has overcome existential crises before—from the aftermath of the Great Fire of London to the birth of Lloyd’s itself. While today’s polycrisis demands new thinking and new tools, he believes the industry is fully capable of rising to the challenge. The path forward, he said, is not despair, but innovation, partnership and the collective resolve to “get to work.”
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