The recent hardening of insurance markets mean that European companies are now taking an interest in forming captive insurance companies, an option that they have for so long ignored. FERMA’s 2020 European Risk Manager Survey showed that 43% of risk managers are now considering the captive insurance option in 2020 compared to just 15% in 2018.

It is logical to see a correlation between the hardening of the insurance market and the rise of the self-financing solutions. Traditional insurance has been the main tool to cover risks, but with the hardening market, it becomes less cost-effective for organisations.

The shortage of insurance capacity for some risks has pushed risk and insurance managers to explore other ways to insure these risks. Captive managers, underwriters, and regulators have all reported a significant increase in interest and formation activity over the past 18 months, as corporations of varying sizes look for alternative risk transfer solutions.

Within this context, we believe the use of captives will rise. The question is around the timing—the hardening market has already started, and clients need a bit of time to fully utilise their captive. We just hope it is not too late for some of them.

The 2020 European Risk Manager Survey also showed the use of captives for non-traditional lines, such as cyber threats and employee benefits, are becoming “more important” for 56% of respondents.

If this is thought-provoking please do contact us to discuss:

Ian Du Feu – Director
Iand@wiltongroup.com
T: +44 (0)20 7355 3525

John Dupont – Director
JohnD@wiltongroup.com
T: +44 (0)20 7355 3525