Once a niche tool for large corporations managing property and casualty risks, captive insurance is having a transformational moment.
No longer limited to traditional risk retention, captives are now being leveraged as strategic financial vehicles, expanding into cyber, employee benefits, and directors and officers (D&O) liability, among other lines of insurance. Marsh’s global head of captives, Rob Geraghty (pictured), has dubbed this new phase “Captive 2.0.”
According to Marsh data, captives globally wrote $77 billion in premiums in 2023, a 6% increase from the prior year. This growth includes 92 new captives worldwide. Geraghty told Insurance Business that he has seen how deeper C-suite involvement is leading firms to view and use these entities in exploratory ways.
“There’s more demand from companies wanting to get more out of existing captives,” Geraghty said. “CFOs are asking, ‘We already have a captive – can it do more? Can we retain more risk? Can we write additional lines? Can we explore alternative risk transfer (such as) parametrics, multi-liner or multi-year programs?’”
Geraghty noted that captives are increasingly becoming the first port of call before companies look to the commercial market.
“What’s different now is that captives are not just for property and casualty anymore,” he said. “We’re seeing companies use them for cyber, trade credit, political risk, intellectual property, and even supply chain disruption.”
A key area of growth is employee benefits (EB), which now accounts for about 20% of Marsh’s global captive portfolio.
“EB had quieted down, but over the last 12 to 18 months it’s back in focus, especially for global companies,” noted Geraghty. “Employers are exploring whether they can integrate EB programs or even set up separate captives just for them.”
P&C premiums in captives rose 12.5% last year, according to Marsh’s data, while life insurance-related premiums, driven in part by EB, grew by 4.5%. Other fast-growing lines include D&O liability (up 49% in 2023), cyber liability (up 17%), and commercial life (up 25%). Cyber, in particular, is now seen as a mainstay captive line.
“Cyber has gone from $13 million in captive premium five years ago to $170 million today,” Geraghty said. “Some companies have even set up entire captives or protected cells just to manage cyber risk.”
Even with the cyber insurance market softening slightly, the risk landscape continues to evolve, especially as threats like cyber warfare and misinformation accelerate. Captives, Geraghty said, are uniquely suited to help companies test, refine, and scale coverage for these emerging threats.
Captive growth is not only about new lines but also geographic diversification. Canada has emerged as a standout region, with premiums rising 78% in 2023, much of it from Alberta, which only opened to captive formations recently.
Marsh has also recorded strong captive growth in several US states, including Utah, Arizona, South Carolina, and the District of Columbia.
As companies look ahead to address new risks such as artificial intelligence (AI) and renewable energy, many are again turning to captives. While products addressing these exposures are still evolving in the traditional market, captives give firms a way to test and scale coverage, according to Geraghty.
“Think of it like cyber,” the Marsh leader said. “Some companies took small retentions at first, then built confidence. Today, we have clients writing up to $200 million in cyber through their captive. The same model can apply to emerging risks. And with $120 billion in surplus globally across captives, there’s ample capital to support this.”
Looking ahead, the momentum for captives is expected to grow. Countries such as France have enacted supportive captive legislation, leading to more than 22 new formations since 2020.
The UK is exploring a similar move, which could offer domestic options for the world’s second-largest parent domicile for captives. “If the UK moves ahead with legislation, it won’t replace existing domiciles like Guernsey or the Isle of Man, but it will expand the choices available,” Geraghty said.
After two decades in the industry, Geraghty sees this as a defining moment for captives.
“(The future looks) very strong,” he said. “I’ve never seen them this mainstream. Years ago, they were niche. Now, they’re a central part of global risk strategies.”
