Captive insurance programs continued to grow in 2025 despite easing conditions in the commercial market, according to Marsh's annual benchmarking report - a finding that challenges the long-held assumption that captive formation is primarily a response to pricing pressure rather than a deliberate strategic choice.
Marsh-managed captives wrote $79.1 billion in gross written premium in 2025, with Fortune 500 companies recording premium growth of 9%. The data covered a year in which Marsh's Global Insurance Market Index recorded a 4% decline in commercial pricing. This means captive growth accelerated in an environment where the conventional financial incentive to self-insure was, if anything, diminishing. The report also recorded 118 new captive formations in 2025, up from 92 the previous year.
The bulk of captive premium remains concentrated in 10 core sectors, led by financial institutions, healthcare, retail and wholesale, automotive, and communications, media and technology. But the fastest growth is coming from elsewhere. The chemicals sector recorded 127% GWP growth year on year, and education grew 98%, a sign that captive adoption is spreading into industries that have historically relied more heavily on the commercial market.
The lines being written are also shifting. Property and liability remained the most common starting points for newly formed captives in 2025, followed by workers' compensation.
However, cyber liability ranked fourth among lines written by new entities, with a 22% increase in the number of captives writing cyber over the past two years. Combined cyber and trade credit GWP reached $600 million. Other lines seeing notable premium growth include errors and omissions, political risk, intellectual property and environmental coverage.
The soft commercial market headline obscures a more complicated picture in casualty lines, and it is there that one of the strongest structural drivers of captive growth is operating.
Nuclear verdict awards totaled $31.3 billion in 2024, more than double the figure for 2023, while the cumulative value of the 10 largest class-action litigation settlements reached $42 billion. US excess liability rates increased 16% on average year over year in the first quarter of 2025, and as nuclear verdicts and social inflation continue to drive those rates upward, captive owners are increasingly moving portions of their excess liability towers into their captives for premium savings.
Transportation is a particular pressure point. Auto liability and umbrella renewals for fleets with hazardous operations trended well into positive double digits in 2025, with higher attachment points and tighter terms becoming more common, prompting fleets to turn to group and single-parent captives to manage primary and excess auto liability layers.
Single-parent captives account for roughly 75% of Marsh-managed vehicles, but alternative structures are gaining ground, according to the report.
US risk retention group formations are increasing, reflecting liability-focused pooling by organizations with similar risk profiles. Cell arrangements are also expanding, with Marsh's Mangrove protected-cell facility recording a 14% increase in the number of cells and a 47% rise in premium in 2025.
Vermont remains the largest US domicile, having licensed 41 new captive insurance companies in 2024 and holding a total of 683 licensed captives. Competition among US domiciles has intensified. Montana enacted new captive legislation in May 2025, introducing a tiered premium tax structure effective from tax year 2026, while more than 30 states now have captive laws in place.
The gap between onshore and offshore domiciles in terms of regulatory sophistication has narrowed considerably, contributing to the even split between onshore and offshore premium flows recorded in 2025.
More than a third of Marsh-managed single-parent captives wrote some element of reinsurance in 2025, while Marsh-managed captives ceded $11.5 billion to the reinsurance market.
Across the industry, captives write approximately $62 billion in direct premiums annually and maintain a five-year average combined ratio of 83%, outperforming commercial insurers by 17 percentage points.
That performance gap helps explain why organizations are persisting with captives regardless of where the commercial market cycle sits. For commercial insurers, the trajectory represents a structural reduction in the addressable market for certain risks, particularly in large corporate casualty lines, and a gradual shift in their role from primary risk carrier to reinsurer or excess provider.
The expansion of captive use into sectors such as education and chemicals, and the lower barriers to entry offered by cell structures, suggest the conversation about captive feasibility needs to start earlier and reach further down the client spectrum than it once did.
