Marsh report reveals surge in captive use

Marsh report reveals surge in captive use | Insurance Business

Marsh report reveals surge in captive use

In what has become an increasingly difficult insurance landscape, more and more organisations are turning to captives to provide the protection and financial flexibility they are looking for.

That’s according to brokerage giant Marsh, which has just released its 2020 Captive Landscape Report outlining that tightening conditions during 2019 led to the higher use of captives with steep volume growth across several lines.

In particular, it pinpointed business interruption, contingent business interruption and supply chain premiums, which, among Marsh-managed captives, skyrocketed 283% during 2019. All-risk property premiums, meanwhile, increased by 64% on average, with the energy and financial sectors leading the way – they saw increases of 151% and 104% respectively.

According to Ellen Charnley, president of Marsh Captive Solutions, the trend has only continued with the COVID-19 pandemic further challenging market conditions.

“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,” she said. “While none of the new captives formed so far in 2020 specifically cover pandemic-related losses, organizations 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$3 billion from their captives using short-term liquidity tactics, such as intercompany lending, to help them respond to cash-flow challenges brought on by the pandemic.”