More companies using captives to manage risk

Captives increasingly play an integral role in organisations’ risk management strategies, according to the latest report from Marsh.

The insurance broking and risk management group’s Marsh Captive Solutions division has released its 2017 Captive Landscape Report , which examines more than 1,100 captives worldwide under Marsh management.

The report focuses on understanding how captives are being used and where opportunities for greater utilisation exist. Among the findings:

  • The number of owners using captives for cyber liability programmes increased by nearly 20% in 2016, representing the fastest-growing non-traditional risk in Marsh-managed captives.
  • The majority of these – 74% of US and 62% of non-US captives – regard funding corporate retained risk, such as large deductibles and self-insured retentions, as their captive’s primary benefit.
  • The number of new captives formed by parent companies in Latin America increased by 11% in 2016-the largest growth among all geographies.
  • Small captives-those generating less than US$1.2m in annual premiums-continue to dominate the landscape and account for nearly 44% of Marsh-managed captives, against 24% in 2012.

“As the risk environment continues to evolve and become more complex, organisations are increasingly using captives to help them meet corporate objectives, support business units, access alternative risk capital and protect employees,” said Nick Durant, president of Marsh Captive Solutions.

The 2017 edition marks the 10th year that the group has published a captive report. In the introduction, it commented: “Today, global economic and political uncertainty is on the rise, and disruption from technology innovation is growing exponentially, exposing organisations to unfamiliar and sometimes unquantifiable risks.

“In parallel with these macro trends, more companies than ever see captive utilisation as being at the core of innovative risk management strategies.”

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