More Firms Using Captives to Finance Emerging Risks: Marsh

New York   |   May 23, 2018

According to a report released today by Marsh, a global leader in insurance broking and innovative risk management solutions, captive insurance vehicles are rapidly growing in popularity as risk managers seek alternative ways to finance emerging risks their organizations now face.

Marsh’s 2018 Captive Landscape Report examines 1,100 captives managed by Marsh Captive Solutions globally. The report found that cumulative growth in the number of Marsh-managed captives writing cyber liability rose by 240% from 2012 to 2017, while in the same period the number of captives insuring employee benefits across multiple geographies grew by 550%.

Marsh also saw an 83% increase from 2012-2017 in the number of captives writing terrorism coverage backed by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA). Many organizations are examining their captives to see if they can take advantage of TRIPRA, which can also be used to cover cyber-terrorism perils in the United States.

According to Marsh’s report, 60% of captive owners surveyed maintain their captive as a formal funding vehicle to insure risks that the parent company has decided to self-assume, and 42% said it was to provide access to the reinsurance market.

The report noted strong year-over-year growth in captives in the Asia-Pacific region since 2012. Last year, Marsh recorded a 24% increase in the number of Marsh-managed captives in Asia-Pacific, largely driven by parent companies based in Japan, China, Hong Kong, and Singapore.

Ellen Charnley, President, Marsh Captive Solutions, commented: “As the global risk landscape becomes more complex, organizations are increasingly using captives to help accelerate their corporate objectives, reduce volatility, protect human capital, and boost financial certainty.

“Captives offer unrivalled flexibility in financing emerging and high-severity risks, such as cyber risks, terrorism, and employee benefits. We expect this growth to continue, as more organizations adopt innovative new ways of placing captives at the core of their risk management strategies.”

About Marsh

Marsh is the world’s leading insurance broker and risk advisor. With around 40,000 colleagues operating in more than 130 countries, Marsh serves commercial and individual clients with data-driven risk solutions and advisory services. Marsh is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people. With annual revenue over $17 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. Follow Marsh on Twitter @MarshGlobal; LinkedIn; Facebook; and YouTube, or subscribe to BRINK.