Captives are growing in popularity as organisations struggle with the increasingly difficult insurance landscape. The impact of the pandemic has been a contributory factor.
Data in Marsh’s latest Captive Landscape Report reflects steep premium volume growth in supply chain, business interruption, and contingent business interruption premiums, with Marsh-managed captives rising 283% on average in 2019. All-risk property premiums rose 64% on average, it said, led by the energy and financial institutions sectors, which saw all-risk property premiums rise 151% and 104%, respectively.
“Marsh formed a record 76 new captive insurance companies from January through July this year, up over 200% compared to the same period in 2019,” said Ellen Charnley, president of Marsh Captive Solutions. “While none of the new captives formed so far in 2020 specifically cover pandemic-related losses, organisations are using their captives to help navigate them through the global Covid-19 pandemic.
“Financial flexibility is one of the key advantages of owning captives, and since March 2020, Marsh has helped owners free US$3bn from their captives using short-term liquidity tactics, such as inter-company lending, to help them respond to cash-flow challenges brought on by the pandemic.”